By Chris Becker
The Romney Rally continues with risk up, US dollar down, AUD dollar up – and ASX200 almost breaching 4500 points! Bulls unite! Bears despair! The rest of us just make money…So even though the AUD was up today – barely – the ASX200 closed up nearly 1% to 4494 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, this time only up 0.4%, the Hang Seng a little better, not finding much direction yet. Aussie bond yields rose again, above 3% again for the 10 year – although this is likely not going to be a trend.
The Aussie battler (AUD/USD) was up smalls, the real action was in the Euro/USD and US Dollar (DXY Index) which swapped places, the former jumping over 1.30, the latter looking like capitulating after its bounce over the last couple of weeks.
The undollar currency gold (USD) is moving up too – and about to hit the psychologically important $1800USD per ounce level:
Australian Stocks
Materials led the charge today, mainly because of gold miner Newcrest (NCM) – which sitill has a ways to go to catch up to the AUD gold price:
But its still the banks pushing the bourse up, make no mistake – here’s the financial sector chart, which is about to breakout to new 2 year highs – and looks overextended after its medium term resistance level was cleared recently:
So for now, it looks like a “Houses” rally – not a “Holes” – we have to wait for the Chinese printing presses to start again next week – going by the Big “owned mainly by non-Australian” BHP chart below, which has yet to breach the $34 key level:
As for the bourse itself, heres the weekly chart to give some perspeective. I prefer weekly charts – but I also want to know how the US mrkets close on a Friday night (Saturday morning) to give the real direction. So while this pattern is indeed very bullish for the ASX200 – closing above the bull trap area and the pre-correction support level from May last year – one of the most important economic releases – the September non-farm US payrolls – comes out tonight, and that is sure to stir up markets.
So don’t just go off to the bar with your mates this arvo and call it a new bull market – remember, we follow the US and a falling AUD isn’t all that is required to get stocks moving.
This daily update needs to be 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.
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