By Chris Becker
The fizzer turned into a Chinese firecracker today as Asian markets exploded upwards due to some PBOC liquidity – although profits are down and growth is slowing and and…well. The ASX200 reversed its early losses from last nights action and closed up by 0.5% or 22 points to 4384 points – I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 was almost the same, up 0.5% with the Hang Seng taking back all of yesterday’s losses, but again the action was in mainland China. The Shanghai Composite soared over 3% in the middle of the session, finally closing up 2.5% after touching 2000 points yesterday.
In Europe, markets have opened in the green, with the EuroStoxx index up 0.4% or 10 points, with US futures also rallying.
The Aussie battler (AUD/USD) climbed about 50 pips during the day, but has come back a bit right on 1.04 against the USD. The Euro/USD is basically doing the same, and is just below 1.29 again. The expected bounce in the US Dollar (DXY Index) has settled a bit with strong resistance at the 80 point key level keeping the risk-off currency steady for now.
Meanwhile, spot gold (USD) continues to hang on after falling very sharply overnight to just abvoe $1735 USD an ounce, climbing to just below $1760USD per ounce:
Australian Stocks
As you can see in the table above, healthcare stocks led the way today (mainly due to CSL and COH – the true industrial powerhouses of the bourse – wish we had more like them) but materials stocks came back on the Chinese stimulus news/rumors/moves.
Here’s the daily chart of the ASX200 where the retracement I expected to the uptrend or 50 day moving average (the grey line above the red line, which is the 200 day moving average) has occurred on cue (I hate it when I get things right with price – it means a completely wrong call is coming). The paths for the bourse are marked pretty clearly, with a bull trap above – i.e the ASX200 needs to get over 4440 – not just 4400 to have any further traction. Remember what I said about making money each way and not worrying about getting it right or wrong – leave that to the bottom pickers.
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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