By Chris Becker
Asian markets were very mixed today, and going into our lunch meeting today, the Shanghai Comp looked like it had capitulated, but on the other side it rallied leaving the rest of Asia behind. That included the ASX200, which took back all of Friday’s gains and more, closing below heavy resistance at 4400 points, or 0.5% to 4385 points – I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 had a similarly rough day, the Hang Seng bringing in a scratch too, down 0.36% currently. The Shanghai Composite was down 16 points before rallying strongly after lunch, almost getting up higher than its intraday high on Friday. But there’s no denying that Chinese markets are under huge pressure – and the divergence between the official GDP numbers and economic reality as shown by the bourse continues to increase…
Euro markets have opened, and all are down almost 1% or so, so the nervousness continues….
The Aussie battler (AUD/USD) slipped throughout the Asian session and is currently just above 1.04 against King Dollar with the Euro/USD doing the same, but recently had a little spike to almost 1.30 after a very volatile Friday session. The US Dollar (DXY Index) is the opposite (obviously) but still within its 5 day uptrend – a small bounce from a big decline recently – and is currently at 79.43 points.
Meanwhile, spot gold (USD) continues to bounce off heavy resistance at $1780, with support at $1760:
Australian Stocks
As you can see in the table above, only health stocks had any meaningful gains, with the rest of the bourse taking big hits, particularly material stocks. In the ASX8 (the top four miners and banks), the biggest mover was gold miner Newcrest (NCM) down nearly 3% looking like a bull trap (that’s a broad meme at the moment…) as the gold price takes a breather.
As for the broader index, here’s the daily chart – where the “jaws of doom” between 4400 and 4440 are closing in with another close below the trap line. I’m expecting a retracement to the uptrend or 50 day moving average (the grey line above the red line, which is the 200 day moving average) with strong support at 4200 points.
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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