ASX Shares Daily – 19th June

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By Chris Becker

Remember to read “Trading Week“, which is normally published for free Saturday morning (but is moving to a new timeslot and format), to put these events and ideas in context.

I am disapoint. That is the main takeaway from today’s action in risk markets across Asia as the expected post-Grecian orgy in risk wafted into a stinking reality of bad Spanish chorizos and lumpy Italian pasta, served with a bucket of ice water. The equivalent let down of struggling all night to get to second base and then realising you need to get home before curfew kicks in. The ASX200 dropped on the open and tried to claw its way back to positive territory, but didn’t quite get there, down 14 points or 0.3% to 4123 points, after yesterday’s clear breakout from the sideways moves of the past weeks:


I said yesterday that it is obvious that the local bourse needs to dig itself out of the hole it created by falling off that red uptrend line to the left – i.e get back above 4200 points and the 200 day moving average, before this relief rally can turn into a bear market rally.

We were the best in Asia today, with the Nikkei 225 down 0.75%, the Hang Seng currently off nearly 0.5%, whilst the Shanghai Comp continues to disappoint, down 0.4% at the moment.

On currency markets, the Aussie remains just above 1.01 and was the non-mover of the day after spiking last night. The Euro/USD cross is also pretty weak, climbing from 1.2577 to just under 1.26 after falling sharply last night (and making my EURAUD short hedge better by the day).

The US Dollar Index (DXY) has recovered somewhat, just above 81.8 after climbing last night, against, well everything as risk went off after being on, when before that it was on, then off for awhile, then on. Phew. Hard to keep track of this…

Gold – come on already! It really, really wants to break out above $1630 or so. This is another trade I’ve got a VERY close eye on. If it fails to breakout above the current levels, it will likely slump back down to very strong support at $1525-1530 IMO:

There are two things to note here; first, from a trading point of view, for my system there is no clear entry signal; however, secondly that does not mean I’m not long – I always have a gold hedge in my portfolio, it just means I’m not adding to it (nor offsetting the risks in USD, which I also keep as a hedge against risk volatility).

In AUD terms gold is steady at $1609AUD per ounce – holders in AUD terms have seen no real move since early January by the way, but I think there’s a definite bullish bias here. 

Finally, in the debt markets today, everybody piled back into their favourite “cleanest shirt in dirty basket” with Aussie 10 years, taking back all of their losses of yesterday, yields falling almost 10 basis points (100 basis points to 1%, so thats 0.1%) to be at 2.97%

Meanwhile bond markets have opened in Europe with not much fanfare, compared to the huge moves I saw as I was writing this post yesterday. In fact Spanish and Italian bonds are being bought up – but there is a sizeable auction tonight to keep an eye on.

Tonight

The G-20 are meeting tonight – and if I hear the term “addressing the crisis” one more time I’ll snap that person’s fingers back. You don’t address a crisis, you solve it FFS. Or you walk away and let someone with the leadership skills to have a stab at it. Hey, you voted for them (kind of).

The FOMC (Federal Reserve Open Market Committee – similar to our RBA monthly ice-vovo and tea board meeting to decide for the market what rates should be) also starts it two day meeting tonight, but wont announce what happens until after the meeting concludes, or around 2.30am Thursday AEDT time.

Other data tonight will include the UK CPI print for May, the usual weekly US secondary retail data from Redbook/Goldaman-ICSC and then housing starts, with consensus expecting 720K for May, which is consistent with the rise in levels since October last year.

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