Gold Retraces, Our Market Set To Strengthen
March 11th, 2010 by Katy Loi
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 10,567.33 | 2.95 | 0.0% |
| NASDAQ | 2,358.95 | 18.27 | 0.8% |
| S P 500 | 1,145.61 | 5.17 | 0.5% |
| FTSE 100 | 5,640.57 | 38.27 | 0.7% |
| Nikkei 225 | 10,563.92 | -3.73 | -0.0% |
| ASX 200 | 4,872.90 | 7.9 | 0.2% |
| COMEX Gold - Dec 09 | 1,108.20 | -14.1 | -1.3% |
| COMEX Silver - Sep 09 | 17.31 | -0.028 | -0.2% |
| COMEX Copper - Sep 09 | 336.9 | -4.25 | -1.2% |
| WTI Spot | 82.23 | 0.93 | 1.1% |
| AUD-USD | 0.9152 | 0.001 | 0.1% |
| Aluminium | 2,200.50 | -23.5 | -1.1% |
| Copper | 7,395.00 | -146.5 | -1.9% |
| Lead | 2,206.00 | -34.5 | -1.5% |
| Nickel | 21,945.00 | -605 | -2.7% |
| Tin | 17,250.00 | -300 | -1.7% |
| Zinc | 2,318.50 | -31.5 | -1.3% |
The Dow finished fairly flat overnight, continuing its fourth session of range bound trading. The Dow is now trading at levels from January 21 and back above long term moving averages as it seems to be testing new waters; lacking conviction in either direction. Now hovering at these levels, the question becomes whether it can break the last high it made of 10739 mid January.
The next catalyst for a move forward could lie within the banks where the market may need clarity on bad loans being cleansed off the books so they can be valued as an ongoing basis. A positive sign is that Citigroup rallied 3.7% overnight as the bank sold trust preferred securities to raise capital. Citigroup has been up 12% in the last 5 days which shows it is exceeding government capital requirements. Financial shares in the S&P500 has increased nine sessions in a row which is the longest streak in 12 years.
Looking to our S&PASX200 cash index, we have key resistance level at 4955/86. It has quickly reversed its break below 4502, holding its rising 40-week average to allow the broader trend to remain higher.
If the market trades through the 50% retracement resistance at 4955/86 the leg higher could be 5177 initially then 5426 next. With our market closely tied to China, the Shanghai Composite looks to be forming a bullish triangle. There needs to be a sustained break above 3263 to see through what should be a bullish continuation pattern to the upside..
With Gold down $14.10 as speculative buyers closed positions, we could see funds shift back into equities. We could see investors wanting to increase exposure to domestic leveraged stocks and as a result see off - shore buying in the consumer discretionary stocks, and the banks. This would be a good opportunity to enter stock positions on dips ahead of the next rally. Coking coal imports by China, the world’s largest steelmaking nation, surged fivefold last year after the government closed smaller unsafe mines which could see BHP strengthen over the next couple of months.
Macquarie Group shares added 0.45% yesterday to finished at $49.05 as it has revealed plans to buy more US assets to gain a larger slice of the world’s investment-banking market.
Data to look out for today at 1130 (AEST) is Feb unemployment with consensus to be unchanged at 5.3% and consumer inflation expectations for March.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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