Stocks In The Red. Gold and Aussie Dollar Rally

December 11, 2013

Not the best night on global stock markets and a downright terrible night for the ASX with the SPI 200 continuing the very weak close we saw yesterday afternoon.

It seems that with just a few trading days until the FOMC decision next week that the short term topside momentum for global stocks was a little harder to find overnight.

Certainly the dataflow was pretty much on the money in all jurisdictions with Chinese industrial production retail sales and urban investment all on the money with expectations coming in at +10%, 13.7% and 19.9% respectively. UK IP was also on the money at 3.2% year on year and Italian GDP was a tiny bit stronger at -1.8% in Q3.

But at the end of European trade it was a sea of red with the FTSE down 0.56%, the DAX 0.88% lower and the CAC down 1.04%. In Milan and Madrid stocks fell 0.27% and 0.52% respectively.

In the US at 7 AEDT AEDT with an hour to go before the close the Dow has slipped just below 16,000 down 0.22% to 15,990. The Nasdaq is down 0.14% to 4,063 and the S&P 500 lost 4 points or 0.24% to 1,804.

1795 is the key short term level fo me at the moment. If it gives way the S&P might have a little downward cascade but otherwise it’s just going nowhere.

The ASX has performed abysmally over the past few weeks. We have had a target of 5068 for a while now and in the context of when that call was made we are getting very close now. Anyway before we look at the technicals in trade overnight the SPI 200 got hammered as yesterday’s aborted rally continued into acute weakness. At 7 AEDT the December contract is down 42 points at 5104 bid while the March contract is 42 points lower at 5072 bid.

The low overnight of 5092 was right on the 200 day moving average which was the initial target back when we made the call. So in the sense of my system and my approach I am now comfortable that we have had the move I was expecting.

The weekly charts still point lower and a break of the 200 day moving acverage would open the way to 5028.

On Forex markets the Euro made a new high against the US dollar for this run at 1.3795 before backing off ever so slightly to 1.3774 for a gain of 0.28%. While we are on the Euro it is worth noting that IMF boss Christine Lagarde said overnight it was ludicrous to think that Europe’s economics woes were over – particularly with 12% unemployment. Who can argue with that on a night that Greece also showed its industrial production crashed 5.2% year on year in October.

Elsewhere on global FX markets Sterling is up a little at 1.6451 but the Yen has pushed back from weakness above 103 yesterday with USDJPY sitting at 102.62 this morning. The Aussie dollar has also pushed back against the Greenback, and others, and sits at 0.9159 this morning up 0.54%.

I’m long Aussie and it has continued to find support on each dip.

Like gold yesterday the Aussie is finding resistance at my fast moving average and if that breaks it will be a run to 92 cents which is my expectation and target.

On Commodity markets gold spiked $28 oz. or 2.28% to $1263. Silver was its high beta self and rose 3.29% to $20.29 oz and copper closed at $3.30 lb. Crude ripped higher again up $1.06 a Bbl or 1.09% to $98.40 on fears of bigger inventory reductions. Over in the Ags pits corn fell 0.23%, wheat dropped 1.33% and soybeans were 0.60% lower.

Yesterday we looked at the daily chart and I said if it broke $1245 it would run and the $1265 region where it is now is short term resistance. But my target is now $1290/$1300. I’m still long.

On the data front today in Australia we get the Westpac Melbourne Institute Consumer Sentiment Index while in Korea we get Import and export price growth as well as the unemployment rate. In Japan we see goods prices and machinery orders.

Tonight in Germany CPI is to be released along with the unemployment rate in Greece which might focus a few minds on Madame Lagarde’s overnight comments. In the US the MBA mortgage applications are released and the Nymex Crude guys and girls will be watching the draw on crude inventories when the EIA releases its weekly report

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