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 as “Technicals“, published 8.30am each Monday morning.
Now that was a fun day! Green, green across the board – well actually the PSei Phillippine index was down 0.03% – but apart from that! This was all in response to Friday’s nights ebullience and Asia has responded in kind. The ASX200 gained over 1.2% or 51 points to 4272. I have a closer look at the bottom of the post for a full roundup including technical analysis of the bourse itself – but the main reason was the BHP downgrade.
The Nikkei 225 did even better – up 2% but still within a wide trading range, so no reason to get excited (although my short term trading system signalled an initial long) While the Hang Seng was up 1.6%, the action was on the mainland Chinese markets -all up, the Shanghai Comp up 1% to 2154 points. Have we found a bottom? A closer look would be to check out the equivalent of our ASX8, the FTSE 25 (which is the underlying index the IZZ China shares ETF tracks, although is unhedged in AUD) – that looks like a breakout to me trendsetters:
On currency markets, the Aussie had a good day, but has slipped coming into the evening session, just on its open at 1.0545 against the USD whilst the Euro/USD has done the same, slipping as well after spiking above 1.244 this morning.
Whilst it may not be gold for Australia (and to be frank who gives a sh#t? Its just sport FFS) gold (USD) is being more bullish than the “golden” currency and the “battler” – climbing all day, currently at $1605USD per ounce. Its finally bounced back in AUD terms, finding a temporary bottom at $1522AUD per ounce after falling for the last two weeks.
James Bond: Do you expect me talk?
Goldfinger: No Mr Bond. I expect you to die
The goldfinger bond permabears had a field day today – the 10 year Aussie bond seeing yields rise almost 14 points to 3.25% – are we seeing a double bottom bullish (bearish for bond prices) pattern emerging here?
Euro bond markets have opened and its green green green – Eurobonds are all up, yields all down. Has normality returned? Err no. If you think right now is normal and that the next 30 years will be the same as the last 30, I have a subscription to AFR to sell you. I ain’t reading it no more.
Australian Stocks
Have I got this annotation wrong? Is this a false breakout or are we on the way to 4400 or 4500 points, having cleared this “congestion” area, with very short term support and resistance marked by the two orange horizontal lines?
I did a larger writeup in this week’s Technicals at Macro Investor, published this morning. I still reckon you can find better risk/reward ratio trades and positions in other shares, sectors and indices in this rally, but I could be wrong about the ASX200 (my medium term system is long, but I’m not, if that’s telling enough).
That’s the business of investing – it doesn’t matter how often I say it – its not how much you are right or wrong that matters, its how much you make when you are right and how little you lose when you’re wrong.
If you can’t understand that axiom – stick to knitting!
Oh and here’s the full Bond/Goldfinger bit:
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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