Opinion: Rose-tinted traders Price: 3530 MONITOR Technical Points Resistance Major 2 3632 Minor 3607 Major 1 3582 Minor 3544 Gravitation 3505 Minor 3480 Major 1 3455 Minor 3417 Major 2 3378 Support Analysis: In Brief:
Overseas US markets rallied sharply overnight, with President Obama moving to establish a facility to absorb banks’ toxic debt The Dow gained 201 points (+2.5%), the S&P500 put on 28 points (+3.4%) and the Nasdaq closed 53 points higher (+3.6%) The UK market jumped higher, with the banks extending their rally to a third day The FTSE 100 closed 101 points higher (+2.4%) Commodities Oil finished slightly ahead, bouncing back from big falls in the previous session Oil for March delivery finished at US$42.24 a barrel, up US 58 cents (+1.4%) Gold declined for a second session running with some investors choosing to liquidate their positions while the price was above US$900 per ounce Gold finished US$11.40 lower (-1.3%), closing at US$890 an ounce Base metals were mixed with copper (+1.5%) and nickel (-3.4%) the biggest movers Ex-pat stocks Most Aussie stocks closed higher on Wednesday night BHP up 4.6% in the UK, up 4.3% in the US. RIO down 1.5% in the UK, down 2% in the US AQP up 9.7%, NWS up 10%, AWC down 3.8% Companies TAH – 1H net profit of $263.2 million, down 3.7% on year AWE – lowers output forecast by 3% due to BassGas disruption Brokers GWT – upgraded to Neutral by UBS LGL – downgraded to Hold (from Buy) by ABN AVO – downgraded to Neutral (from Buy) by UBS US markets climbed again, with the Dow notching its third straight gain, and other major US indices racked up a fourth straight gain. The Fed also kept interest rates unchanged overnight.
There were plenty of reasons for the good run to come to and end overnight, with Starbucks announcing massive job cuts and massive writedowns at bank Wells & Fargo, but the markets went up anyway.
As we mentioned yesterday, the US is well into its quarterly reporting season and plenty of dirty company laundry has been aired.
The reactions to bad news seem be to tempering slightly, with traders looking for skerricks of good news to justify some bargain hunting.
This is all the more important given we are own the verge of our own half-year and full-year reporting season, and a positive take on company results will make a big difference to where the index sits in a month’s time.
Likely Price Action: We've been talking about that open price gap in the 3530s for the past two days, and lo and behold, it’s finally been filled in overnight trading.
It’s always amazing to see how the gaps work like magnets for price, sooner or later they always fill.
So the gap has now filled, and the market has rallied strongly overnight.
It looks like the SPI might have enough left in the tank to climb a bit higher, and the market can probably continue up to the 61.8% Fibonacci retracement level at 3590 today.
An assault on 3590 would present a serious selling opportunity for the active day trader, and there aren’t any other clear chances to trade until that happens.
So the market faces resistance at 3590 today, with support at 3450.
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