By Chris Becker
It seems risk markets are questioning more and more the efficacy of QE3 with Asian markets slumping today, with European markets recently opening down 1% across the board. The ASX200 closed below 4400 points, down nearly 0.5% taking back yesterdays gains to 4397 – I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 also took its good gains back, down 1.5% to 9086 points, the Hang Seng doing exactly the same taking back yesterdays 1.1% – and both remain around their 200 day moving average. Instead of going nowhere like yesterday, the Shanghai Composite has fallen sharply – down 2% and almost breaking below 2000 points and back to its January 2009 lows:
The Aussie battler (AUD/USD) has followed (led?) everything else this afternoon and slumped over 1 cent today, after almost reaching 1.05 before the start of the session, now down to 1.0388! The Euro/USD followed in suit, down 1 cent against king US Dollar now below 1.30, whilst the DXY Index has rebounded sharply to over 79.5 points – are the currency markets telling us something?
Meanwhile, gold (USD) has come down a bit too, but not as much, losing around $10 today to $1760USD an ounce – but this is the sixth day in a row of hitting resistance at $1770 or so:
Australian Stocks
As you can see in the table above, its only been Telstra (the telecomm sector) that has benefited today, with falls across the board, but mainly energies and materials as oil dropped signfiicantly overnight. As for the broader index, here’s the daily chart – where the “jaws of doom” between 4400 and 4440 are closing in……its a hard time now managing risk – do you take profits and run, “buy the dip”, or cut losses on a recent entry? Sometimes not making a decision is a decision:
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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