By Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Asia market are a-booming, all because – contrary to the very poor Cupboard reporting – of speculation about a possible China stimulus.
There is not a single fact behind this story, its’ all because of a single investment report (which also said that China is likely to grow below a 7% rate) – but that doesn’t matter. Risk on and unicorns are a blazing!!!
The ASX200 finished up well over 1%, but in the morning was looking shaky with no leads (read: USA) to go off. The usual suspects were the oversold resource sector (1.6%), but other’s also appreciated, including the banks.
There was a hint of a possible bottom here, if you’re into candlestick analysis (big debate recently in the MA office about this) with daily support above 4000 points shown by the long “wicks” on the downside (this indicates lots of intraday buying at those lows – I call it the “hands” lifting up the market…) Following on from this yesterday’s close also “engulfed” the previous two down days, another bullish – if noisy – signal.
So if we hold here and the speculation turns to reality, given that all the Chinese share markets (Taiwan up nearly 3%, Shanghai up 1.1%, Shenzen up 1.5%, Hang Seng up 0.8%) are now racing ahead, the likelihood of another short term upcycle is rising (sic).
In other Asian markets, the Nikkei 225 took part in the rally, even though unemployment ticked up this morning, retail sales were quite good in the worlds 3rd biggest economy.
On to the currency markets, and the Aussie is surging, about to hit 99 cents against the USD, with my short term term bottom thesis I suggested recently firming up:
The USD Dollar Index (DXY) has come down .2 points, due mainly to Euro and Pound Sterling strength. Gold is also having a good Asian session until a few minutes ago. now at $1579USD per ounce, up $5. If it can sustain this past $1600, a new medium term uptrend is likely to emerge, and would do so in conjunction with risk-on in other assets:
In AUD terms the shiny “currency” remains at $1597AUD per ounce.
Tonight
The data flow tonight is relatively light, with US Case-Shiller House Price index for March and US Dallas Fed Manufacturing for May. US markets reopen after Memorial Day, so it will likely be a volatile night – probably on the upside. European markets have all opened in the green, the EuroStoxx already up over 1%, the majors leading the peripherals.
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