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 from next week), to put these events and ideas in context.
The ASX200 fell a further 1% today to 4048 points, almost on support as seen in the chart below:
Excuse the candles again, but you can see that after rejecting the 4120 points breakout level from Monday, the market has headed straight back to support at 4045 points (the red horizontal line). If the market falls below 4025 points – the intraday lows of recent weeks – the next level down will likely be 4000 or so. This is the sixth week in a row we’ve closed at or around 4050 points.
Does that mean a time to buy? Only for the brave (and my own indicator says step aside, if you are after capital gains – this looks just like the 1990/2003 bear market)…as I keep saying, get used to this volatility folks – this will be around for awhile yet.
In other Asian markets, the Nikkei 225 was down 0.3%, catching up to the rest of Asia with the Hang Seng down 1.5% and the Shanghai Comp down 1.4% to 2260 points.
These losses have been transferred on the open of the European sessions, with all major and peripheral markets down 1% or slightly less.
On currency markets, the Aussie has been hit hard, trying to recover intraday but falling below 1.005 as risk comes off (it is the proxy de jeure) whilst the Euro/USD cross is doing the exact same – down to 1.254. The US Dollar Index (DXY) is moving up nicely as a result, now above 82.3 points after rising nearly a full point overnight. Hope you’ve got some USD ETF in your portfolio?
Gold continues to fall, now down to $1565USD an ounce as it continues to take a kinghit after The Bernank refused to press the magic red button. As I said yesterday “if it fails to breakout above the current downtrend soon, it will likely slump back down to very strong support at $1525-1530 IMO” – well, we’re halfway there already. If it breaks below that level, watch out – here’s a closeup of the weekly chart:
In AUD terms gold is also falling, now at $1560AUD per ounce .
Finally, in the debt markets today, Aussie 10 year yields fell over 8 basis points to 3.04%, whilst European bonds have diverged again at the open, with Spanish and Italian bonds sold off and run to the core. Oh for some Eurobonds hey?
Tonight
Dataflow tonight will focus mainly on the German IFO survey a clear measure of business sentiment in the export dependent economy. After last nights flash PMI result, the consensus reading may go down below 100 (currently at 105.5). he result? Basically contracting faster across the board – only German services was above 50 (just – 50.3) but down on 51.8 prior. Manufacturing across the EMU is nosediving, there’s no question about it.
Later on the Italian consumer confidence index comes out – not much to expect there but mamma mia!
Have a good weekend – I’ll give you a preview of the new Trading Week tomorrow, but then you’ll have to wait to early next week to see the big change.
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