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.
The bizarro world on equity markets continued afresh in Asia today as the mainland Chinese market had a hissy fit and sold off whilst the ASX200 came back today, up 6 points or 0.1% taking back yesterday’s losses. I have a closer look at the bottom of the post for a full roundup including technical analysis of the bourse itself.
The Nikkei 225 did the same, barely up, while the Hang Seng was down 0.7% reflecting the mainland Chiense losses, with the Shanghai Comp down 0.5% to 2111 points. As I said yesterday, I don’t want to be as foolish and naive as others who equate one day’s action as a bottom, its like property analysts saying one quarter result means the end of a multi year trend…..anyway.
In other Asian markets, the Singapore STI finished in the red, tentatively above resistance but pausing for some breath?
On currency markets, the Aussie has swung up a little bit today, but remains steady over the last couple of days, just giving the day traders some more work, currently at 1.048 moving into the European session.
The Euro/USD was up slightly, the US Dollar Index (DXY) down slightly. Why are waiting, slowly….da da da daa..
The “going nowhere” symphony extended its chorus to gold (USD) currently just above $1600USD per ounce level and in AUD terms the weakness continues, as the currency remains strong, currently at $1527AUD per ounce.
Aussie bonds continue to be sold off, the 10 year yield currently just below 3.15% – Euro bond markets have opened and everything is calm and normal. I don’t like that. Its green across the board – pre-empting the pre-emptive ECB strike on Euro bonds? hmm…Another interesting night for sure.
Australian Stocks
Looking to the table showing all the sectors and ASX8 stocks (the top four banks – Megabank – and the top four miners), the best mover was energies, mainly because of ASX8 non-favourite Woodside (WPL) up 2% today. Macro Investor readers will get my report on sectoral investing across the ASX200 and today’s 0.2% print really shows that you have to look beyond the headline to see where the big moves come from.
BTW, we’re long WPL in Macro Investor too on a pair trade idea, but crude itself isn’t moving much…
As to the index itself, I’m still getting vibes that the current breakout above the closely watched 200 day moving average maybe a bulltrap, given the rising wedge pattern that formed. Remember I use patterns to form an idea, but not to enact a trade – I’m a systems trader, not a pattern trader, but they are useful in describing what has happened, if not what may happen.
A reader yesterday asked me about the possibilities surrounding the ASX200’s future direction, particularly using the downtrend line from the August 2007 high – here’s the six year monthly chart – make up your own mind where the possibility lies.
By the way, on the back of yesterday’s bruhaha about the Yanks setting up a carrier base in Perth, The Diplomat is running a competition to see what the PLA-N (chinese navy to you and me) should name their new carrier – I reckon the “Jackie Chan”….?
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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