By Chris Becker
A green green day across Asian bourses today, albeit at low volume as everyone awaits the outcome of the German court decision tonight on the rescue fund ruling – which has just come in – allowing the ESM ratification, with conditions. The ASX200 had a solid day and was up almost 1% or 36 points to 4361 points, getting ever closer to the key level of 4400. I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 did even better, up nearly 2%, with the Hang Seng up 1%, the other Chinese markets were not as strong, with the Shanghai Composite only up by 0.3% after being in the red most of the afternoon.
The Aussie battler (AUD/USD) is sitting high after a strong rally overnight took it to over 1.04, and up nearly another 0.5 cent today to be below 1.05. The Euro/USD fell nearly half a cent against the USD on the court release, but is holding above 1.28, as the US Dollar Index responds by climbing above 80 points, but only just:
Meanwhile, Queen Undollar – gold (USD) – is lifting slightly above $1735USD per ounce as it moved wildly last night and still on trend, possibly to $1800USD from here.
Australian Stocks
Briefly Aussie stocks had broad gains, with staples and IT sold off slightly as risk moved to risk – i.e banks. The ASX8 (top four banks and miners) major movers were all the bank stocks, although RIO and BHP had a crack too, with the latter poised to break above resistance at $33.40, as a base is forming on the daily charts:
As for the index, here’s the daily chart:
As I said before, I considered a retracement down to the 4250 area and the 50 day moving average to be health for a sustained rally, and a good entry point for a long position (although my own systems are not long the ASX200, but are in other indexes). I also still consider the area between 4400 and 4500 a likely place for a bull trap, which requires analyse of the S&P500 and DAX30 instead of solely looking at our own tiny little market. Macro matters!
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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