By Chris Becker
The ASX200 bounced off 4400 points and fell 8 points to 4394 taking back most of yesterday’s gains – I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
Other Asian markets had similar mild falls, although the Chinese markets continue to drag down. The Nikkei 225 lost 0.4% to 9123 points, the Hang Seng the same, both oscillating around their 200 day moving average, looking for a proper direciton. The direction is fine with the Shanghai Composite – down – after losing over 2% yesterday, down another 1% today to 2059 points in whats looking like yet another China bull trap:
Probably the best risk proxy around, the Aussie battler (AUD/USD) continues to meet overhead resistance at 1.06, bouncing back sharply to 1.0454 whilst the Euro/USD pauses just below 1.31 as the US Dollar Index has a slight uptick that I’m thinking will turn into a decent retracement, possibly up to 80 points (I covered this possibility in Technicals on Monday)
Meanwhile, Queen Undollar – gold (USD) – is also pausing on what has been a great run so far, but its a little too “KC” – i.e “hea tooa fast”…
Australian Stocks
As you can see in the table above, its been a scratch day across the board, with only health stocks coming about alongside utilities as the AUD eased off slightly. There does appear to be a larger trend in place however, with a rotation out of health and staples and into materials/energies – note the weekly chart below of the healthcare index (which sadly, there is no ETF available) showing significant overhead resistance and selling:
As for the broader index, here’s the daily chart, showing it has yet to pass the next test, gaining higher than it KC Signal high back in April. This does look like a double top pattern (oops I’m becoming “bearish!!!!”) for mind, but hitting resistance like this is normal in a bull upmove. The difference being you don’t want to hang your hopes on it being just that and are relying upon Aussie stocks to provide your gains for the year, because you are likely to be disappointed…
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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