Friday, 27 April 2012

NASDAQ 100, ASX 200, AUD/USD and Gold Friday night wrap

It's Friday night in my part of the world, typically a time to kick back and settle in to the weekend. Tonight it's worth taking a quick look at the charts. The market action of this week, today, and particularly the past few hours, has been especially interesting. What a week it has been, with Spain's credit rating downgraded, and from an Australian angle, surprisingly low CPI. Despite a barrage of bad and/or bearish news, the markets look to be rallying in to the end of the week. Strong divergences between news and market action are notable, food for thought.

I'll start with the NASDAQ 100, as its strong rally during the first 3 months of 2012 lead the way for global stocks. It has now broken upwards from the recent down trend channel.

The ASX 200 is pushing again at resistance in after hours trading. I think I have only spoken about my trading positions once before on this blog, when I said on Tuesday that I had a small short on the ASX 200. In trading you've gotta roll with the punches. I exited that position just now as a head clearing exercise, only 20 points above where I went short. I have no position in the ASX 200 now, and right now I have no idea whether my next ASX 200 trade will be long or short. Likely I will focus my trading on other markets for some time, which is something I usually do after becoming a little too emotionally involved with a view on a particular market. Usual disclaimer: none of this is advice. Full version here.

The AUD/USD has this week re-tested the level of the symmetrical triangle apex, and has broken upwards through a short term trend line. I won't include an Elliott Wave count tonight, but suffice it to say, since the April 11 low, upwards moves have been impulsive (5 waves) and downwards moves have been corrective (3 waves), the very definition of an up trend.

Last but possibly not least, Gold is rallying toward the upper line of its short term trend channel. Everybody has a macro view in their head, by which I mean a story that helps them make sense of the markets. My view may be simplistic and/or misguided, but the only way I can make sense of a new rally in stocks, is if the unit of value for stocks (dollars) is declining in value against real stuff (one example being Gold).

ASX 200 priced in US dollars peaked on February 29

As of yesterday's close (April 26) the ASX 200 priced in US dollars was trading approximately 3% below the February 29 peak. A subtle indication of weakness? Certainly compared to the S&P 500, weakness is evident.