Opinion: Earnings count Price: 3418 MONITOR Technical Points Resistance Major 2 3491 Minor 3473 Major 1 3455 Minor 3433 Gravitation 3410 Minor 3392 Major 1 3374 Minor 3352 Major 2 3329 Support Analysis: In Brief:
Overseas US markets continued their positive momentum overnight, helped by lower oil prices The Dow gained 59 points (+0.7%), the S&P500 put on nine points (+1.1%) and the Nasdaq closed 15 points higher (+1%) The UK market declined for the first time in three days with sentiment hurt by an earnings forecast downgrade from utilities company Severn Trent The FTSE 100 closed 15 points lower (-0.4%) Commodities Oil fell more than US$4 per barrel overnight, the biggest fall in three weeks Oil for March delivery finished at US$41.58 a barrel, down US$4.15 (-9.1%) Gold pulled back after its week long rally Gold finished US$9.30 lower (-1%), closing at US$901.40 an ounce Base metals were all stronger with copper (+7.5%) and lead (+7.1%) the major gainers Ex-pat stocks Most Aussie stocks closed higher on Tuesday night BHP up 1.1% in the UK, up 5% in the US. RIO down 1% in the UK, up 4.5% in the US AQP down 10.1%, LGL up 1.6%, AWC up 5.3% Companies LGL – produced a company record 882,000 ounces of gold in 2008, ahead of guidance of 850,000 ounces AQP – predicts a loss of $75 - $85 million for December half Brokers OST – upgraded to Hold by Citi APN – downgraded to Underperform by ML The US markets made another moderate gain overnight, and this was the third consecutive winning session for the S&P and Nasdaq.
These gains came despite shocking numbers from the US housing market and the worst consumer confidence numbers on record.
Importantly, as we discussed yesterday, much of the bad news from the US’s fourth-quarter reporting season is now out in the open, and it’s possible we might see a calmer market after the heavy mid-January selldown.
So, don’t be surprised if markets don’t over-react to bad economic news over the next few weeks.
For the big players, the main game centres on whether there is any sign of a pick-up in economic activity in the next six to nine months.
For us, our December half-year reporting season kicks-off this week, so we can expect a torrid time of it over the next month or so.
Likely Price Action: As can be seen on the chart above, the long-term downtrend line came into play overnight, and price action is confirming its validity by testing and rejecting that level.
In our analysis last evening, we noted that sellers were still lurking, and that our mind had not been made up entirely as to whether the market would continue higher or stall.
For that reason we stuck to the sidelines.
Today, our thoughts are back with the bears, and more selling pressure is our call for today’s session.
The overnight highs just beneath 3450 are the core of the resistance, and therefore, our view is to see lower prices as long as the market maintains trade under 3450.
The first immediate support level to target is 3350.
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