More unicorn hunting today as the bearish mood takes over as economic growth figures disappoint. What needs to be put in context is, just like the recent reporting season, profits and the economy are still growing, both around the 2% rate. The rate of change is always the worrying sign, not the headline number.
Back to the speculating – the S&P/ASX200 fell another 1.4% or 61 points to 4143 points, breaking down out of its sideways triangle, with daylight below to 3800-3900 points, but…
…note on the weekly chart (which is more important) that there is support at around 4100 points where the local bourse could create another higher weekly low. If it doesn’t, whoosh, off to 3800 points again:
Other Asian markets also retreated, but not as much with Japan’s Nikkei 225 down 0.6% to 9576 points, the volatile Hang Seng is currently down 0.8% to 20645 points. The Shanghai Composite is also down just over 0.5% to just below 2400 points, still above its breakout from its long term downtrend channel, but looking weak.
As I mentioned in my Market Morning update, the AUD continues to weaken and as I said yesterday, a “break below 1.06 would prove mightily bearish, but would probably coincide with a risk-off commodity correction“. The commodity-wide correction has not yet occurred, although there has been some volatility in the precious metals, but copper and iron ore look ok for now. The commodity proxy remains below support, now at 1.055, but contrarians may be eager to bid it up at these levels:
After a horror night, Gold didn’t move much during the Asian session, still around $1676USD per ounce or $1590AUD per ounce and still looks pretty weak, but support at its 200 day moving average around $1660 likely to bring in the gold bugs.
The ASX8
Regular readers will know I follow the ASX8 (the top four banks and miners) on a daily basis, as they are effectively a big proxy for the entire market – the Houses and Holes. Add Telstra (TLS) and you’ve pretty much covered the major stars (or dogs, depending on your point of view) of the market.
In broad brushstrokes, the ASX8 were all hit today in a broad selloff, with Megabank down around 1.5 to 2% according to division, and the twin holes (BHP and RIO) feeling the same pressure.
Outside the majors, retail stocks felt the full punch of the “surprisingly” low GDP numbers, with Billabong (BBG) taking a 6% hit, Harvey Norman (HVN) down 2% and JB Hi-Fi (JBH) a 4% hit – remember my trading idea? Well, I got that wrong which shows that risk management is always more important than investment selection (a fact lost on many, even those who should know better).
The Futures
The futures are looking a bit mixed, with US and Euro markets probably opening up, but just a few points, whilst the local market has lost another 10 points to around 4140 points at the moment. The data tonight will centre around US private (ADP) payroll numbers and then later, consumer credit.
Let’s see what happens in Market Morning tomorrow.
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