ASX Shares Daily – 17th August

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By Chris Becker

It’s a fairly green day in Asian equity markets, well that’s the impression if you just look at the ASX200, which has closed up nearly 1% to 4370 points. I’ll take a closer look at the bottom of the post for a full roundup including technical analysis of the bourse itself.

The Japanese markets have moved similiarly, with the Nikkei 225 up 0.8% after yesterday’s bigger move, but the disappointment was again Chinese. The Hang Seng is up by 0.5% but the mainland Chinese markets are all down, although only moderately so on the Shanghai Comp , off 0.2%

Aussie 10 year bond yields stabilised today after the big gains (hence bond prices down) of yesterday, and are hanging around just below the 3.5% mark.

On currency markets, the Aussie continued to slip, hitting overhead resistance (which was support) at 1.05, while the Euro/USD has put some runs on the board as the US Dollar Index slips from overnight strength.

In precious metals, gold (USD) continues to remain volatile intra-week but still moving sideways on trend up around 1% today to $1617 USD per ounce, and also moving up slightly in AUD terms, now at $1545AUD per ounce.

Australian Stocks

Earnings season continued today – which explains another “late” post – expect a few more weeks of this as we continuly update our “FARM” database as full and half year earnings reports come in. Today ANZ announced quarterly sales figures which looked very good at first glance, hence the share price gaining nearly 3% today, and the best mover in the ASX8 (top four banks and top four miners)

IT stocks were the best performers in the sectors, which were all up. In fact, most stocks are up – and many small caps particularly, something I mentioned was likely to occur in Macro Investor previously, reflected in the move in the Small Ordinaries Index.

Looking at the weekly chart, we can see that this current rally has been very sharp indeed, taking us back to the 4400 resistance level extremely fast (too fast? Casey Stoner too fast? Hmmm)

I still have the 4400 point target in mind, in lockstep with the SP500 up to possibly 1500 points, and then the inevitable dip awaits – which may or may not turn into an outright correction, particularly if the promise of more milkie wilkies (QE3) does or does not materialise. We’ve been here before and this has all the hallmarks of a bull trap, as earnings results are not as good as they appear at first glance, as UBS has reviewed earnings so far and they are down -2% for FY12, but prices are up, volume is very low….

I’m a broken record, I know, but you must remember that in investing and trading, capital/risk management and allocation mean more than picking winners. Focus your energies on managing your investments, not obsessing over the best entry point of stock pick.

As always, watch for the overnight markets for the leads and check out other indicies/sectors and stocks for opportunities.

Have a good weekend!

These daily updates need to be placed in context with the longer trends and drivers amidst the overall technical picture, where Former “Trading Week” readers will find it reborn as “Technicals“, published 8.30am each Monday morning.

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.

You can follow Chris on Twitter.

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