By Chris Becker
Its the Monday after the manic 25th anniversary of the 1987 stock crash and we’ve had a “Tom Jones” day in Asia with most bourses slipping, some going up slightly in a “not unusual” fashion. The ASX200 fell at the open but came back slightly losing 30 points or 0.7% to 4541. I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 had a good day after a very solid last week but still not close to breaking out in my opinion – leave this one to the range traders (no, not the Lone Ranger) while the Hang Seng was up, the Shanghai Composite had a slipping day, currently down a few points. Not much to write home about.
Aussie bond yields came back a bit again today after being assaulted last week and are hovering around 3.14% – do you remember when they were over 5%? Not that long ago and with today’s atrocious MYEFO/Mini-Budget, its an opportune time to maybe issue a few hundred billion in bonds to fund, I dunno, infrastructure, research – you know, those productivity enhancing things so we can compete in the Asian 21st century? Pretty cheap at 3% no?
Stepping off my soapbox and looking into my crystal ball, the Aussie (AUD/USD) is proving elusive in terms of direction. In this week’s Technicals I laboured that almost all risk markets are stuck in trading ranges, and if ever there was a proxy to show this to be the case, the “battler” is it:
The Euro is very sticky as well, slipping in afternoon trade whilst the US Dollar Index (DXY) has put on 0.2 points – in other words going nowhere. Very frsutrating conditions!
Here’s the surprise for the QE3 fizzer so far – gold (USD). After hitting $1800USD its bounced back to nearly $1700, breaking through temporary support for a short-term, short trade. If it doesn’t climb back above $1735 and then rally beyond $1755 within the week, it could fall as far as $1630US an ounce, taking the commodities complex with it:
Australian Stocks
The best sector today – i.e with the smallest loss – was consumer staples – the worst healthcare because of a slip in CSL’s price. Materials came off the boil a bit, with volatile Rio Tinto (RIO) and Newcrest (NCM) the standouts in the ASX8 (the top four banks and top four miners, which provide the bulk of earnings power in the index).
Newcrest is looking bearish here, with a descending triangle pattern with support – and the 50 day moving average – under pressure at $27 per share. If gold doesn’t recover???
As for the index itself, its currently well overbought with a KC Signal (a signal I developed to try to find turning points in overbought and oversold markets) late last week still clanging…A retracement to the trend line would be a healthy thing for the market to keep going, but a fall below and also support at 4440 points – the former high where the last KC Signal was successful – could mean a significant correction is around the corner:
This free daily update should be read alongside Live Trades articles, published every morning at Macro Investor, and placed in context with the longer trends and macro drivers within the overall technical picture, where Former “Trading Week” readers will find it reborn as “Technicals“, published 8.30am each Monday morning at Macro Investor.
Chris Becker is an investment strategist at Macro Investor, Australia’s leading independent investment newsletter covering stocks, trades, property and fixed interest. A free 21-day trial is available at the site.
You can follow Chris on Twitter.
Disclaimer: The content on this blog should not be taken as investment advice. All site content, including advertisements, shall not be construed as a recommendation, no matter how much it seems to make sense, to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy. The authors have no position in any company or advertiser reference unless explicitly specified. Any action that you take as a result of information, analysis, or advertisement on this site is ultimately your responsibility. Consult someone who claims to have a qualification before making any investment decisions.