By Chris Becker
Its the Romney Rally! Following the “you have the illusion of choice” US Presidential debate just after lunch our time, risk markets took off with the ASX200 knocking aside poor retail sales data closing up 13 points to 4452 points: I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
With the mainland Chinese markets closed for the week, the Nikkei 225 carried the load again, this time jumping 1% with the Hang Seng having a scratch day. Aussie bond yields rose, taking back the points lost yesterday, now almost at 3% on the 10 year. The Aussie – the battler (AUD/USD) – has been oscillating and is now just over 1.02 while the Euro/USD and US Dollar (DXY Index) not moving much either, although the latter looks like capitulating after its bounce over the last couple of weeks.
The undollar currency gold (USD) is moving – up over $10USD an ounce today looking like on its way to $1800, and also priced in AUD now at $1743AUD per ounce.
Australian Stocks
Banks banks banks. I have a love/hate relationship with banks, as I’m sure all of you do too. Well, maybe not – I love to trade banks, I love to see them rise and fall, but I absolutely hate their concentration in the index – almsot 30% now. And their Return on Equity (ROE) in the mid teens is a ridiculous level for a financial institution – it really shows how much support the politico-housing complex has…
Anyway, rant over, as you can see in the table above, it was the financials that lead the gains today, while materials slipped, lead by Newcrest Mining (NCM). Here’s the breakout in the financials:
Instead of the daily chart of the index, here’s the monthly chart – which looks like heading over the narrow year long trading range between 3900 and 4400 points. If the bourse can end the week, or better the month, over 4400 points its on its way to 4900 – probably led by the banks and maybe the builders?
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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