Opinion: Can an Ox be a Bull? Price: 3345 MONITOR Technical Points Resistance Major 2 3466 Minor 3436 Major 1 3406 Minor 3370 Gravitation 3333 Minor 3303 Major 1 3273 Minor 3237 Major 2 3200 Support Analysis: In Brief:
Overseas US markets finished stronger overnight (although lost ground on Friday), spurred by optimism surrounding a US$70 billion takeover in the pharmaceutical sector The Dow gained 38 points (+0.5%), the S&P500 put on five points (+0.6%) and the Nasdaq closed 12 points higher (+0.8%) The UK market rallied sharply on stronger banking stocks The FTSE 100 closed 157 points higher (+3.9%) Commodities Oil finished lower for the first time in four sessions Oil for March delivery finished at US$45.73 a barrel, down 74 cents (-1.6%) Gold closed at its highest level in almost five months amid speculation US government spending will see a spike in inflation Gold finished US$13 higher (+1.4%), closing at US$910.70 an ounce Base metals were mainly weaker with zinc (-5.6%) and copper (-5%) the hardest hit Ex-pat stocks Most Aussie stocks closed higher on Monday night BHP up 7.3% in the UK, up 0.4% in the US. RIO up 8.7% in the UK, up 2.8% in the US AQP up 16.4%, LGL down 2.2%, AWC down 1.8% Companies PLA – produces first concentrates at the Smokey Hills platinum mine Brokers BHP – downgraded to Hold (from Buy) by Citi PDN - downgraded to Hold (from Buy) by Citi VPG – downgraded to Underweight by JPM Well, it was the Chinese New Year over the weekend, so for the second time this month we can take a deep breath and hope for a better year ahead.
In the Chinese calendar, this year is the year of the Ox, and that’s close enough to a bull to provide a little bit of hope.
However, as we saw just four weeks ago, the renewed optimism from the turn of the Western calendar was dashed pretty quickly, so we wouldn’t count our chickens just yet.
On the plus side, global markets have tried to push higher in the last couple of sessions. The US trimmed large losses on Friday and closed in the black last night.
Again, the fourth-quarter reporting season continues in the US, and this will be the key factor for markets going forward.
However, after the heavy selldown over the last few weeks, don’t be surprised to market quieten down toward the end of the reporting period.
In usual conditions, market will often react violently to the first few company reports, but then clam down as investors extrapolate the early results across the market.
But, again, don’t count on it – we are hardly in ‘usual conditions’!
Likely Price Action: Today, we should see 3379 as the key level for the current downtrend.
This level acts as a horizontal resistance line as well as the intraday downtrend line intercept.
While below that level, the trend to the downside remains firmly intact. .
We have no choice but to be mechanical here. With the market sold down from strength numerous times over the last few weeks, shorting on strength has to remain the strategy until conditions change.
The 3379 level presents a selling opportunity for intraday SPI traders this morning, but we’d use tight stops.
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