By Chris Becker
As we near the end of the month, the quarter, the local earnings season and of course Friday and the possible return of more “milkie wilkies”, markets continue to move nowhere. The ASX200 had a scratch day, down 3 points to 4356 – 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 (and the KOSPI) are the standouts, up 0.4%, with the Hang Seng also having a scratch day (so far), but again, Chinese markets disappoint, with the Shanghai Composite nearly erasing yesterday’s gains and down nearly 1% to 2055 points. Although this is a representative market, the actual China H shares (as measured by the Hang Seng China Enterprise index, or HSCE) is still dragging along, and still above the March 2009 lows – note I trade this index from time to time:
The Aussie battler (AUD/USD)basically hasn’t moved for the last couple of days although it accelerated up this arvo to almost breach 1.04 against the USD, I think this is a reflection of patience before the Jackson Hole speech, where all risk markets are in a holding pattern. After spiking yesterday the Euro/USD cross is also stalled at 1.255 against King Dollar, whereas the US Dollar Index is also pausing at just above 81 points:
Gold (USD) too is seeing lots of crossed candlesticks with no more buyers or sellers stepping up to move prices, and remains just below $1670USD – and in AUD terms the story is the same, just under $1610AUD per ounce
Time to sharpen stops, maybe put some option trades on for the brave? (I don’t mean selling!)
Australian Stocks
Earnings season continues to slow down, thank Dog, as we continue to cover the major movers including updated valuations, Risk Scores, macro evaluations, suggested portfolio allocations, position signals and the lot in next edition of Macro Investor. In the ASX8, the pause button is still across Megabank (although I note their CDS – credit default swap – prices are starting to move up – this is a trade I identified awhile back…possibly a trade of the decade) with the biggest mover again Newcrest (NCM) which is coming up to resistance at the 200 day moving average:
Just outside the ASX8 (the top four miners and banks) is iron ore extractor Fortescue Metals (FMG), which dropped through the $4 barrier decisively today as iron ore falls through the trapdoor. A notable cheerleader for the stock has been quite quiet recently – hey, we all get it wrong, that’s the nature of this business….suffice to say, I’m short:
On to the index – which seems to be finding some weak support at 4340 points in the short term, and remains in an holding pattern – but is that 50/200 day cross going to be another “death” like the KC Signal high in April? Nobody knows. And you can’t control that – you can only control your risk and manage your capital in investing and trading.
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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