By Chris Becker
The top for the year or just another dip in a bear market rally? The ASX200 fell 0.8% today or 34 points to 4349 after reacting to last nights mild losses on Wall Street and in Euroland. I’ll take a closer look at the bottom of the post for a full roundup including technical analysis of the bourse itself.
The Nikkei 225 was down over 1% with the Hang Seng also off by 1.2% with the Shanghai Composite currently off by 1% as well, and now below the 2100 point level – are we going down to 1700?
The rest of the board in Asia is red before we move into the European session soon.
Aussie 10 year bond yields dropped again today, losing 5 more points to 3.23% but the big moves are in currency markets, where it looks like a top in the Aussie is in. Against every major cross it has fallen further in the few opening minutes of the European session than it did during the entire Asian session. Its now slipped below 1.04 against the USD:
The Euro/USD cross is slipping, but still holding up yesterdays breakout gains and it at 1.2536 as the US Dollar Index slowly comes up, but still depressed, but looks like breaking out above 81.5, now at 81.48
Gold (USD) after a big breakout is consolidating and following the Euro, now at $1664USD – would you believe there’s rumors the Republicans in the US are considering a return to the gold standard? Probably just platitudes to their narrowing voter base, but interesting development nonetheless. Combined with them wanting to cut the budget deficit sharply (called austerity – hows that working?) this is interesting…in AUD terms though, the breakout is building momentum, now over $1600AUD per ounce:
Australian Stocks
Earnings season is slowing down, but still heavy with some big results today. With almost 100 to cover this week alone, you’ll find the full list, including updated valuations, Risk Scores, macro evaluations, suggested portfolio allocations, position signals and the lot in the next edition of Macro Investor on Monday morning. It’ll be a big list, trust me! Anyway, the market still preferred gold miner Newcrest (NCM) as the best mover in the ASX8 (top four banks and top four miners) as gold prices in AUD continue to breakout. The big moves were in iron ore stocks with Rio Tinto (RIO) off nearly 5%, Fortescue (FMG) off over 6%, Atlas Iron (AGO) also 6% plus, etc etc…heres FMG tracked against the 62% fines spot price (in green). If you’re a shareholder, you need to hope/pray/wish that iron ore recovers soon….
On to the index – I did say the 4400 point level was the target in this rally, and that a dip was inevitable, probably down to 4220:
For this to be a more sustainable rally, I still want to see a retracement back to support of that upward trendline, which gives a better risk/reward entry if you want to be long this volatility. But as always, look to the US market, not here for guidance, or you are flying blind (ASX200 in red):
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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