ASX Shares Daily – 4th July

 

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 asTechnicals“, published 8am each Monday morning.

 

Well today at least is 4th of July, and as a proud half-Yank, I’ve had half a good day! As you can see in the table opposite, the ASX200 beat most other Asian markets today, closing up 1.1% to 4172 points. Check out my analysis after the wrap at the bottom of the post. This looks like a good day to be long Aussie stocks, but I still reckon other Asian markets are more interesting, but that’s the trader in me talking!

The New Zealand NZ50 was up 1.1%, coming off its 3400 base but still no clear signal, whilst the Nikkei 225 was subdued after its very strong bounce and the Hang Seng was flat, as the  Shanghai Comp remains sideways bearish, as I said yesterday, still not wanting to follow through alongside other commodities.

On currency markets, the Aussie had a big spike following the ebullient retail sales (btw, please tell me why we celebrate the profligate spending on retail goods as a “healthy economy”?) but has settled back down.

 

Meanwhile, the Euro/USD cross continues to be put under pressure technically, barely lifting today, still failing to get above the 50 day moving average:

 

Meanwhile the battle between the world’s currency and anti-currency continues, with the US Dollar Index (DXY) holding on for now, whilst gold (USD)  remained effectively flat throughout the Asian session, after building above the $1600 breakout yesterday. In AUD terms, it also remains stuck (although definitely not a “can of beans” investment…..) at $1571AUD per ounce rising slightly overnight.

In the debt markets today,  Aussie 10 year yields came back again, as stocks went up. The generic yield is now 3.2%, right at resistance – this is definitely one to watch….

 

 

Australian Stocks

 

It was holes, holes, gas and fire today as the energy sector mounted another big surge, looking like its finding a medium term bottom.

The big mover in the ASX8 (the big four miners and big four banks, seen in the table to the left) was gold miner Newcrest (NCM) alongside Rio Tinto (RIO) although both need to put on some more gains before the trend traders start to pick it up. Price does seem low compared to brokers target for NCM – currently at $32.23, whereas FARM’s current valuation (for end year 2012) is bang on the money.

On to the index – we’ve had a definitive breakout in the ASX200 today, as it lifted itself outside the trading range between 4000 and 4150:

Is this a long entry signal yet? Tune it to Macro Investor to find out – all I’ll say is we’ve been busy this week!

 

Tonight

Its a relatively quiet one tonight – because the US markets will have the day off, direction tomorrow will depend on the European session. That will be impacted by the release of EMU services PMI’s, including Germany and UK, alongside the revised 4Q GDP print for the EMU and retail sales for May, where the market is expecting a big bounce.

Don’t miss the overnight market updates by my colleague Greg McKenna, in MacroBusiness Morning.

Til then, you can find me on Twitter here.

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Comments

      • completely agree. my smsf is 90% cash at the moment. rumours filtering out of average rate of return in the super industry of .3% for the year, means my rate of return will demolish the “Smartest guys in the room”. not enough people in cash if you ask me. get a new line GB.

        • “my smsf is 90% cash at the moment”

          yours and everyone elses. thats why the banks are reducing rates, becuase they have more than enough deposits. might want to read aj’s link on hearding.

          • i did. so why am i going to outperform all these “non herders”?

            your permabull calls and bottom picking are so far off the mark GB its comical.

            the results speak for themselves.

          • You do of course have audited stats that every single SMSF in Australia has a 90% weighting to cash don’t you GB?

            Or similar stats for the market as a whole?

            Remember – no such thing as “cash on the sidelines” – in terms of shares/cash binary decision.

            When you buy shares for someone, you’re buying them off someone else. Its a transfer.

            Check the Bloomberg IPO Index and RBA stats for net IPO/buybacks to see how many additional shares have been created previously…..its not much…

            Although there can be a build up of deposits when credit growth is positive and governments continue to deficit spend.

            Both of these conditions exist, hence why deposits continue to grow.

          • you permabears just sit here contradicting yourselves. aj says cash on the sidelines is spurious, then EW says he is 90% in cash, then you say “there is no such thing as cash on the sidelines” then what would you call EW’s 90% cash weighting? is that cash on the sidelines or not? banks are reducing savings rates becuase they have more than enough deposits. the heard is in cash. thats not such a bad thing. people find comfort in doing what everyone else is doing, whether its the best thing for them or not. its about being comfortable. so stay in cash and cop lower returns with everyone else if thats what makes you happy.

          • so not only can you not spell, you are almost completely illiterate. you are not paying attention to anything that has been written. your just ranting now GB and looking pretty silly.

          • and banks are reducing deposit rates to maintain margins. its banking 101. it has nothing to do with too much cash? you are really revealing your lack of basic understanding of market mechanisms when you make statements like this.

          • i will keep on HERDING (THIS IS HOW TO SPELL IT gb)! i seem to be outperforming all these savvy contrarians like you GB. contrarianism is only effective if you outperform mate. i am pretty sure you are underperforming and making my job easier every day.