The good data continues to roll out of the US, with jobless benefits claims down, manufacturing expanding and most importantly, the new iPad coming out today sending AAPL to over $600:
By the way, that’s a semi-log scale chart, not linear! Lets check out what happened in detail before the open of the local markets – remember to read Trading Week to always put this daily noise in context, which will be updated tomorrow, including my trading ideas for the week coming.
Starting in Europe, the UK FTSE was flat again, the German DAX up by nearly 1%, a divergence that seems to be gaining traction. The former is probably under performing because of the weakness in the UK economy, the latter, because they are the Masters of Europe? Whatever – here’s the DAX chart, showing they broke above the pre-correction support line from last year, in an epic rally:
The Euro (EUR/USD) was flat again, now just above 1.307 as the USD actually slipped with the USD Index still high at 80.2 points. The Euro still looks weak, just around support for now:
Just a reminder, but not a recommendation, an Australian investor can go long the USD using the Betashare ETF – code:USD. I regularly use this as a simple hedging tool in my super fund and will give an outline of how I’ve done this in recent weeks in my Trading Week post tomorrow.
The AUD rallied overnight, more of a bounce really, up 0.8% to 1.05 against the USD, at 1.044 this morning (Disclosure: I’m short, might add to this soon)
On to the arguably more important debt markets, where the real action is at the moment. The US 10 year T-Notes continue their strong sell off, yields up to 2.28% and 30 year yields now at 3.43%.
Here is the T-note chart of yields, with a very easy trading opportunity identified by pattern identification (self fulfilling prophecy when EVERYONE is watching this market!):
German bonds (bunds) slipped, almost breaking the 2% barrier, with yields rising to 1.97% as the DAX continues to climb, whilst Aussie 10 year bonds are now at exactly the cash rate at 4.25% but with the yield curve still inverted.
The US equity markets all finished in the green last night, consolidating above resistance levels from the April 2011 pre-correction highs. Psychologically, the S&P500 broke the 1400 point barrier – the first time in 4 years.
To commodities where energies were sold off on news of release of strategic reserves by the UK and US, with WTI crude finishing around $105.43 a barrel off by only a dollar or so, whilst Brent crude fell sharply on the news but quickly recovered to be just above $125USD.
Gold recovered a small amount of its recent losses overnight, gaining almost $20USD an ounce on the NYMEX trade (wish I didn’t have to sleep, this is a great market to trade) before coming back to be at $1656 where it remains at the start of the Asian session.
On these relatively strong leads the S&P/ASX200 index futures point to a higher open, up around 7 points to probably open around 4285 or so points. Will we crack 4300 points today?
My Trading Day post will cover the Asian market session and the “ASX8” stocks after the close in the afternoon and I’ll endeavour to do some more in depth analysis, because moves are afoot and opportunities abound as the cyclical bull market in US stocks may become a bear market rally in Australian stocks.
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