Afternoon trading Oct 18

Thanks Oscar and morning crew. Enjoy your break, Cleo - well earned.


Half-time round-up:

Shares cracked 5900 for  the first time in five months even as analysts warned the market looked increasingly vulnerable to a pullback.

The ASX 200 overcame a soft open to advance for a sixth straight day and the eighth time in nine sessions. The benchmark index was lately up 15 points or 0.3% at 5905.

Spearheading the rally were utilities +1.6%, health +1.5% and industrials +0.6%. An indifferently-received production update from market heavyweight BHP constrained gains. BHP was lately off 0.4% after revealing a 3% decline in iron ore production last quarter.

The explosive rally is deep in its second week, leading some analysts to warn of the possibility of a retrace as valuations grow less attractive.

"We can make an argument that we are approaching euphoric conditions, with the elastic band being pulled a little too far," IG's Chris Weston told Fairfax. "Specifically, if we look at the percentage of corporates trading above their 20- and 50-day moving averages, which sit at 93 per cent and 80 per cent respectively, this figure is certainly very elevated.

"Forty per cent of ASX 200 companies are at four-week highs, which is elevated, but not at striking red flag territory just yet.The ASX 200 also trades on 16.17 times expected annual earnings, which again is lofty, relative to the longer-term average, but not above the 16.5x times I would feel makes the index far more vulnerable."


China's Shanghai Composite tacked on 0.15%, Hong Kong's Hang Seng 0.06% and Japan's Nikkei gained 0.09%. Dow futures were recently up 31 points or 0.13%.

Crude oil futures put on 22 cents or 0.42% this morning to US$52.10 a barrel. Gold futures recouped 3.60 or 0.28% to US$1,289.80 an ounce. The dollar was buying 78.53 US cents.


Been a lovely rally. Not far now to an obvious ceiling around 5950/60. The market is on a tear, but we haven't seen a complementary increase in volume, suggesting limited participation. May also be significant that today's market leaders are defensive/yield stocks. Close to topping out? Trading: took the pullback opps in YOJ, CM8 and EHX. Profits taken in the first two, still waiting for the latter to come good. Come off hard over the last two sessions.