By Chris Becker
First up – apologies for lack of updates, I was fighting the dreaded lurgy the past few days – and secondly, today’s Olympic Dam decision by BHP confirms my view of the shallowness of debate in this country about the mining boom, the economy, and of course the politics and ideology that surrounds. But enough of that endless pessimism and doomgloomery – to the markets ahoy where fortunes await!
Hmm. Well that depends on your position and timeframe doesn’t it? The ASX200 doesn’t want to close above 4400 points at the moment, losing 7 points to 4376. 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 down 0.3% after a big slump in the world’s 3rd largest economy trade deficit – although this got hardly any news in the mainstream press – although they understood it quite well in China, with the Hang Seng off by 1% and the mainland Chinese markets all down too, the Shanghai Comp down 0.7% and treading a new low – almost at March 2009 levels:
Aussie 10 year bond yields rose today after seeing some bids on return to safety, currently at 3.37% whilst Euro markets have opened and its mainly green across the board, although Italian bonds are slipping, Spanish yields are just above 6% for now.
On currency markets, the Aussie continues to slip, after hitting overhead resistance (which was support) at 1.05 now down to 1.0443 the “automatic” stabiliser….err stabilises, while the Euro/USD has put some runs on the board and is maintaining strength at 1.245 as the US Dollar Index looks like it has slipped below support at 82 points, although its trying hard to get back up there.
The big news is in precious metals, with gold (USD) looking like breaking out of its sideways funk, now at $1639 USD per ounce, and also moving up slightly in AUD terms, now at $1570AUD per ounce. Silver, platinum and palladium are also all moving upwards. Is this a real move or a bull trap leading into the return of Draghi/traders/insto’s et al from their summer break in the Northern Hemisphere? Hmm..
Australian Stocks
Earnings season continues to avalanche along. What an interesting conversation at today’s investment meeting at Macro Investor…today there were over 30 companies reporting, with BHP Billiton (BHP) the biggest watcher, but I reckon there were more interesting results within that smaller list. Anyway, the market liked BHP’s lack of expansion plans (que?) but it preferred gold miner Newcrest (NCM) as the best mover in the ASX8 (top four banks and top four miners) as gold prices lift. Woodside (WPL) not so much – profit dropped 2%, and it too announced a slowdown in capex, after not finding enough gas to expand its Pluto project. At least BHP and WPL announced bigger dividends…although is this good news for what are supposed to be growth stocks?
IT stocks were again the best performers in the sectors, whilst the Small Ordinaries Index disappointed, falling almost 1% today.
In my recent analysis, I pointed to a probable 4400 point target, with resistance at the former high at 4440 (which was also the support level before the 2011 correction):
Of course, further moves all depend on the US market, namely the S&P500, not our own – you can spend countless hours looking at the Aussie charts, running through financial statements of the many listed companies reporting (and how!) but in the end – we follow the US, by hook and by crook (ASX200 in red):
Or for a longer term view, note the divergence in changes – all because of the high AUD:
If you had read my weekly Technicals piece at Macro Investor, I still think a dip awaits from these heights, with all eyes on the overhead resistance on the S&P500 (and NASDAQ). The bulls are hoping its just a dip, not a correction, the bears want to be proven right, the foxes don’t care and want to make money without getting their heads caught in the bull and bear traps that abound in these market conditions. Risk and capital management wins the day as always.
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.
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