By Chris Becker
A quiet, low volume day on the Aussie bourse, with the ASX200 slipping almost 8 points again – taking back yesterday’s gains and at 4333 points – I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The rest of Asia fared worse on what is probably just a normal retracement day, but with the German’s making noises about the Draghi Put it could be repositioning of longs. The Nikkei 225 fell almost 1%, the Hang Seng had a scratch day but the ebullience in China has deflated smartly, with the Shanghai Composite off by 1% currently:
The Aussie battler (AUD/USD) is boucing along in the mid 1.035 range, reflecting (or is it the other way around? FX traders say their markets reflect “The” market….) broader risk pauses. The Euro/USD is doing better, holding up above 1.28, as the US Dollar Index remains firmly below the 81 point key level, bouncing off intraday resistance at 80.4 points.
Meanwhile, Queen Undollar – gold (USD) – remains at $1735USD per ounce – the weekly chart below shows the pause after the confirmed trend break:
Australian Stocks
Actually a bit of a boring day – well if you trade the way I do, everyday is boring. I try not to get excited about price moves and rarely look at the market intraday anymore. Noise/signal ratio and all that.
As you can see in the table above, the banks have seen a mild sell off, but not quite enough to trigger a short poistion, whilst the miners have had scratch to mildly lower days, including our little friend Fortescue (FMG). After recovering some 20% plus, the iron ore digger-upperer was down 5% today. Where to from here??
As for the index, here’s the daily chart:
And the weekly for some perspective, with all the key levels drawn. Although the 4400 point key level has been noted by me for a long time (as have the obvious 4900 and 4000 major levels), that 4500 2nd resistance level above was inspired by this chart by Colin Twiggs, owner of Incredible Charts (the charting software I use – Disclosure: I have no commercial arrangement with IC, I pay full price – its just a great, simple package – although I wish I could load more commodities/futures prices…..)
I consider the are between 4400 and 4500 crucial and a likely place for a bull trap, which maybe closing around more than just Australian investors. Obviously, the 4400 point level must be cleared, on a weekly basis for any rally to have real legs. For now, we rest above the 200 DMA and wait it out.
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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