By Chris Becker
Its back! Or did the bull never go away? Markets have reacted to the 2nd “we will do whatever it takes” central bank action in as many weeks with all Asian bourses up, including the Aussie, with the ASX200 breaking out and having a stellar day – all driven by the miners of course. The market was up 50 points or over 1% to 4390 points at time of writing. I’ll take a closer look at the bottom of the post including technical analysis of the bourse.
The gains in other markets weren’t even, with the Nikkei 225 up 1.8%, the always volatile Hang Seng up nearly 3% and the Shanghai Composite currently up 1%
The Aussie battler (AUD/USD) saw big gains overnight as the risk proxy de jeure, and has continued that action today jumping over 1% to almost 1.06 as the USD gets caned across the board:
The Euro/USD is also rallying, now above 1.30 as the US Dollar Index remains weak and heading for its April low:
Meanwhile, Queen Undollar – gold (USD) – is having a great old run – up 2% or more today and looking really overbought here – but would you sell?
Australian Stocks
Green green green! In the ASX8, the big movers were not the banks – although all had good days taking back yesterdays losses and then some, it was all mining stocks. The biggest winner being gold miner Newcrest (NCM) breaking out:
As for the index, here’s the daily chart, showing it has reached its previous high where it was sold off (look at the upper tails) and todays action being very bullish from start to end. The next target here is the previous high at 4440 points – if it breaches that we are off to 4700-4900 points, alongside the S&P500 in lockstep.
Dr Bernanke, the forever annoying Australian stock permabulls thankyou. The permabears retire to their dens, whilst the rest of us just go long, again and setup for the next reversal, which will follow probably after Christmas. But for now, what are you NOT long?
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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