By Chris Becker
A ho hum day on the ASX200? Ah no – this is a 15 month high as the bulls salivate and the bears go back into hibernation.
The rest of Asia did pretty well too – although China was subdued – after following European stocks which rallied strongly overnight. The ASX200 jumped at the open and stayed there, gaining 36 points or nearly 1% to 4528. I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The Nikkei 225 also jumped, up 1.2% continuinig a nice bounce off support and its rising trendline and the Hang Seng finally followed in step, up nearly 1% too. The Shanghai Composite disappointed however, only rising 0.3%, one of the poorer performers today.
Aussie bond yields were assaulted – gaining almost 10 points for the 10 year up to 3.11 while European bond markets have just opened, with Spanish yields tumbling down 25 points to 5.5% even. The Aussie battler (AUD/USD) gained slightly today, but apart from the super short term traders (or those “optimists” who think its going to 1.10 or 1.20 or something) this isn’t a long signal yet, as it remains below its 200 day moving average and my MACD-H indicator is still negative, but closing in:
As I explained in my Live Trades article this morning at Macro Investor, USD weakness is coming back after a short term bounce, so the Euro/USD responded by rising well off its support level, with a break above 1.31 possible tonight. Here’s a chart of the US Dollar (DXY Index) to paint the picture – maybe we’re finally moving out of the sidewaysish funk (thats an official term) and getting some direction?
So it looks like I was wrong and right about gold (USD) After going short using my short term system (which is not the medium term system I use at Macro Investor -its for cross hedging my trades) on a possible drop down to $1730 yesterday, the shiny precious metal has rebounded off one of its levels back above $1750 per ounce. A break above $1770USD per ounce would see this trend resuming so for most who are long here structurally this is an opportune time to load up again:
Australian Stocks
Telstra (TLS) i.e the telecomm sector had a good day today – well all stocks except staples had a good day really. TLS was up 2% as news filtered in that its moribund dividend – stuck at 28c since 2006 – maybe increasing! Huzzah!
In the other sectors, industrials finally pushed on with heavyweights Brambles (BXB) and Leighton (LEI – up nearly 3%) helping out. In the ASX8 (the top miners and banks – our own little index here at MB!) the best performer was Rio Tinto (RIO) up 1.7% but this is noise really. Its still going nowhere as you can see on the weekly chart – the 13 day ADX (a directional indicator – rising means theres trend up or down, falling means directionless) is bubbling away doing nothing and the stock seems stuck at $56 or so:
Stockland (SGP) reported that a slowdown in property will hurt their 2013 bottom line, with FY2012 figures down 33% on previous results. The stock fell 4% today to its previous resistance, now support level on the weekly chart. This is a stock we’ve looked at shorting before, but that idea was taken off the table due to macro (lower rates) and technical (higher prices and momentum) factors. A quick look at the chart says the latter factor looks tenous:
As I said yesterday, weekly charts are more fun than dailies. In addition to using them for my superannuation fund investing and trading, I’m also using them on US stocks, although I have scant time and capital to trade them at the moment!
This is an easy chart to understand – a break of the downtrend from the April 2011 high and the false breakout in April 2012, with the weekly price above the 200 day moving average and the 13 day ADX moving higher – although it is approaching the overbought level at 40 points:
Hey let’s go to monthly charts – here’s one I show my Technicals subscribers at Macro Investor – can’t get more clearer that we’ve broken out of a trading range is it? The obvious target overhead is 4900 points or so. So far, this is transpiring as expected for a secular bear markets where 20-50% rallies and corrections EACH YEAR are normal.
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.
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