Market wrap: US stocks hit three-month highs overnight after a surprise rise in consumer spending. The major stock indexes each gained more than 2% as investors continued to ignore negative economic news and focus on the positives. US GDP slumped a disastrous 6.1% in the first quarter of this year but investors were cheered by a 2.2% rise in consumer spending, following a 4.3% fall in the previous quarter.
The rally in stocks buoyed commodity prices and there were broad gains across the bourse. Banks and REITs put on more than 4% and mining stocks saw healthy rises.
Oil pushed back over the $50 mark to finish up more than 2% at $50.93. Gold gained less than 1%, recently trading at $899.30. Base metals bounced hard after almost two weeks of weakness, with copper spearheading strong gains as fears about swine flu receded.
If yesterday's lead for the Australian market looked weak, today's looks very promising. Futures traders drove the SPI up 41 points to close at 3762. That figure would probably have been higher if not for two disappointing bank profit results this week from NAB and ANZ. The financials may continue to weigh on our market today.
And now a word about bottoms. Specifically, rounded bottoms. This is one of the most reliable patterns in charting and there are several examples developing in the local market just now. I mentioned GPT and GMG yesterday (I hold the latter), which are developing nicely. There's also PEM and I bought SRK yesterday, although the pattern is not yet confirmed there - needs a day or two. For examples of how these patterns "should"/could develop, look at the recent action in NDO and MEO. There are no guarantees in trading but these are high-probability patterns. I'll post any more examples I can find after I've scanned my watchlists.
