Australia 200 Forwards ($5 mini) Mar-09 TODAY Opinion: Bad news express Price: 3614 MONITOR Technical Points Resistance Major 2 3714 Minor 3690 Major 1 3665 Minor 3649 Gravitation 3632 Minor 3608 Major 1 3583 Minor 3567 Major 2 3550 Support Analysis: In Brief:
Overseas US markets retreated again, extending the market’s worst week in nearly three months on the verge of the latest reporting season The Dow shed 125 points (-1.5%), the S&P500 retreated 20 points (-2.3%) and the Nasdaq closed 33 points lower (-2.1%) The UK market finished lower for a fourth consecutive session, brought down once again by weak commodity stocks The FTSE 100 closed 22 points lower (-0.5%) Commodities Oil dipped below US$38 per barrel with investors doubting further cuts from OPEC will overcome the slide in demand Oil finished at US$37.65 a barrel, down US$3.18 (-7.8%) Gold declined the most in six weeks as the US dollar advanced Gold finished US$34 lower (-4%), closing at US$821 an ounce Base metals were all weaker, suffering in line with other commodity markets. Nickel was the worst, down 11.3% Ex-pat stocks Most Aussie stocks closed lower on Monday night BHP down 3.3% in the UK, down 6.9% in the US. RIO down 1.4% in the UK, down 7.7% in the US AQP down 4%, AWC down 11%, LGL down 8% Companies CFX – extends $125 million debt facility to 2011 OZL – has entered into exclusive negotiations in its asset sale program ANZ – increases PT Panin Bank Stake to 38.3% Brokers TAH – started at Underweight by MS The 1.5% drop in the Dow overnight doesn’t quite present the full picture of what was another terrible session in financial markets.
Rather, the sharp falls in certain currencies, like the Aussie and the Euro, and the huge falls in oil and gold prices, show that it was another night of fear. In short, the song remains the same.
Meanwhile, the US fourth-quarter reporting season kicked-off less than two hours ago, with Alcoa producing its first loss in six year. Alcoa lost close to US$1 billion over the quarter.
The US fourth-quarter reporting season is likely to be dire, and the most we can hope for is that sharemarkets managed to pass this test with the bottom dropping out.
Likely Price Action: While we can’t rule out further volatility, the slope of the current trend is strong, and the sell pressure remains dominant.
From experience, we know that by favoring the sell pressure, our odds are increased when trading.
Yesterday, we stuck to our trading plan and continued to suggest the trend was going to roll over back towards the target of 3560.
We see resistance at 3725, and our bias had been to look for shorts while prices remained contained under this all important swing point.
Overnight, US markets tumbled further, carrying over last week’s bearish momentum which has fueled a decline in the SPI overnight.
We look to open up down 59 points so we may see some early buyers push the SPI up to fill the gap around 3670.
Traders can expect strong sell pressure on any upward movement towards that 3670 resistance zone, so for traders not already short, there may be another chance to enter today.
Our bias remains short and the downside target stays unchanged at 3560.
As stated yesterday, until the market closes above the swing point of 3725, this downward sloping trend is valid.
For the short term, 3670 is the key zone of resistance within the downtrend.
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