By Chris Becker
Remember to read “Trading Week“, published Saturday morning, to put these events and ideas in context.
Before you get excited about the headline, please remember its Towel Day, and the first thing to remember, in capitals of course is, DONT PANIC
The ASX200 remains stuck and does not want to breakfree into the verdant fields of yet another bear market rally (we are now in the 5th year of a secular bear market in equities, the average period is 13). I continue to be reminded of the Japanese secular bear market, particularly the post 2000 era (where prices dropped 60% peak to trough, before rebounding over 100% – this would equate to the ASX200 falling from 5000 to 2000 points…and then back up to where it is now). Note the Nikkei 225 is still at its 1983 price.
Enough doom and gloom, thankfully we haven’t had any big increases in asset prices in the last 10 years like the Japanese did. Except commodities. And property.
Today the local market fell 26 points or 0.6% to 4029, now below short term support above 4050 points on the daily chart:
The next level of support for the market to slide to is just below 3900 points, formed by the double bottom in late September last year. Is the market becoming oversold and ready to bottom well before that? Perhaps. My main position system remains short. I’ll give my thoughts in Trading Week – after I watch the Friday night closes in the more important risk and volatility markets overseas (which move ours: macro matters) tomorrow.
Again, individual investments, or at the very least hedging your exposure, count here more than following the ASX8, or dumping your entire portfolio as some have cautioned recently.
Onto other Asian markets, where its mainly red across the quote screen although the Nikkei 225 finished up slightly on positive inflation print (not positive for food prices, which like here are too high), the Hang Seng is down 0.2%, and the Shanghai Composite currently down 0.8% with no good news to report from the Middle Kingdom.
In the currency markets, the USD remains largely unchanged throughout the session, the Aussie still slowly forming a possible short term bottom as I suggested recently:
But like the ASX200, the AUD in the medium term is coming to the bottom of its recent support/resistance “box” (formed from the post QE2 era) at around 96 cents. A break below would likely see a fall to 90 cents or even further.
Gold was having another weak Asian session until a few minutes ago, leaping ahead over $1560USD per ounce, possibly on news the Germans may decide on Eurobonds after all. Its actually leapt ahead priced in Euro as well as AUD terms by $2 to $1598AUD per ounce.
One to watch – things are moving quickly here…
Crude oil is strengthening only slightly with both markers (ICE and WTI) barely moving.
Tonight
The data flow tonight is light, with Italian retail sales and US consumer sentiment. Although on reflection, gauging the consumer portion of 2 of the worlds biggest economies (Italy is No.7 – although to hear Andrew Forrest say it, it doesn’t matter what happens in Europe…..stick to your knitting or digging Twiggy) is probably very important.
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