By Chris Becker
A quick glance at the table above – and remembering that there’s more to “the market” than our tiny little bourse, and you can see that the Yen is finally having an effect, whereas today’s leadership change in China is having a stumbling effect on their markets. Having said that, the dip in the ASX200 is fast moving to full correction mode – the market fell nearly 1% today. For a full roundup, see below including technical analysis of the bourse.
The Nikkei 225 gained nearly 2%, all because of the Yen, which is finally beginning to weaken not only against the USD, but all the crosses:
Normally the ASX200 would follow the AUD/JPY cross, which looks like finally breaking out of its range:
The Chinese markets are down, Hang Seng taking back most of yesterday’s gains whilst the Shanghai Composite is down and still battling its bull trap:
The Aussie is off with a lot of chatter about the RBA intervening in the markets recently to get the overvalued, overblown and mis-managed (sorry) currency back to a better trading range, while the other risk/safe harbour currency, gold (USD) is still sitting above support at $1720USD per ounce:
Australian Stocks
You know its a bad day on the bourse when the best sector performance is a scratch day – i.e Telecomm. It was mainly materials that dragged the index down today, off by 2% while industrials and energies continue to fall.
It seems my KC Signal is working well, with the market down 4.5% or around 200 points, after confirmation by closing below the trendline, then the 50 day moving average and the April 2011 high. Its now just hovering above the 200 day moving average, the last kicker before a full blown correction can be called:
On the weekly chart, this is a big bearish candle – if we dont get a rally tomorrow and close above the “trap zone”, this looks ugly and set for a fall down to 4000 points,
And for the difference between having an opinion where markets are headed and having a position – here’s mine. I bought some December 4500 strike puts the day after the KC Signal for my super fund, risking a little over 1% on the position – which has turned into a near 3% portfolio return (although I’m considerably underweight shares in super, less than 30% in total, on the investment side of my barbell portfolio – which has no materials or financials either):
The BEAR ETF does a similar job, but without the leverage or knowledge required to trade options (which is out of the realm of most amateur investors, contrary to advertised opinion) so position size must be greater, which is a massive tradeoff, unless you get the timing right.
We look to Europe tonight with trepidation, and US markets which seem to have brushed off QEInfinity with scorn…
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.
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