By Chris Becker
These daily updates need to be placed in context with the longer trends and drivers amidst the overall technical picture, so head to Macro Investor for a free trial. Former “Trading Week” readers will find it reborn as “Technicals“, published 8.30am each Monday morning.
Well I am disappoint again – the only drag on our model portfolios remains Chinese shares (a speculative play) – and this is reflected across Asian markets which all had a great day today – except in mainland China. First, the ASX200 put on nearly 1% or 35 points to 4245 points – check the bottom of the post for a full roundup including technical analysis of the bourse itself. The Nikkei 225 did the same, putting on 0.8%, continuning to bounce off the 8300 point low with 9100 points the resistance level above, now at 8635 points (and correlated to the JPY as always – couple of trade ideas there in the offing…)
The Hang Seng did the right thing again shooting up 1.4%, but its the Shanghai Comp, currently down 0.5% to 2117 points, now below its January low and maintaining its downtrend, although the MACD is flattening off:
In other markets, the Singapore STI was up 0.8% still hitting resistance around the 3000 point region, wanting to break out, the KOSPI up the same – 0.8% – whilst the New Zealand NZX50 closed up half a percent for the day.
On currency markets, the Aussie has remained sideways today, after almost hitting 1.05 on Friday, the risk proxy is now at 1.0467 moving into the European session, while the Euro/USD is also consolidating after the massive volatility over the last couple of days, now just below 1.23. The US Dollar Index (DXY) is reflected this strength back as weakness and remains depressed below 82.8 points.
Is there movement at the station for the anti dollar gold (USD)? The spot price is slipping in afternoon trade, now just below $1620USD per ounce. As I mentioned in “Technicals” this morning, there are some keys to the gold puzzle, and we maybe getting very close to a resolution to this sideways “move” and volatility soon. In AUD terms there isn’t much to report, although the spot price just took a dive below short term support at $1548AUD per ounce.
Aussie bonds continue to be sold off as yields rise almost to resistance at 3.2% – whether or not this is good news is debatable but for traders therein lies an opportunity to short 10 years and perhaps buy some long dated calls on the other side. For investors – you’re still out of luck – as yields on Term Deposits and savings accounts continue to fall.
Australian Stocks
Looking to the table at the left showing all the sectors and ASX8 stocks (the top four banks – Megabank – and the top four miners) having a good day – with financials leading the way, again. Oh for a bourse not filled with “houses”, but something, I dunno – more productive? Anyway. The laggards were staples, energies and utilities – the classic defensives that get put aside in risk-on rallies like this.
The main action in the ASX8 is the Commonwealth Bank (CBA) division of Megabank, a good barometer for risk as it makes a two year high and seems on its way to $60 a pop – are you game?
As to the index itself, today’s action has taken the daily price above the closely watched 200 day moving average. I expect a retracement in coming days as “profit is taken”, which is healthy for this trend to continue:
Don’t miss the overnight market updates by my colleague Greg McKenna, in MacroBusiness Morning on Monday and see you tomorrow.
Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. Each week Macro Investor publishes tables on the top ten most undervalued and overvalued stocks on the ASX. A free 21-day trial is available at the site.
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