Australia & NZ Archives - Page 19 of 95

June 9, 2018June 9, 2018

Is ASX 200 resurgence sustainable?

The ASX 200 found support at 5950/6000, a bullish sign. Large bearish divergence on Twiggs Money Flow (13-week) continues to warn of selling pressure but breakout above 6150 would signal a fresh primary advance. Breach of 5950 is unlikely at present, but would warn of a test of primary support at 5650/5750.

ASX 200

The ASX 300 Banks decline continues, heading for a test of its 2016 low at 7200.

ASX 300 Banks

The ASX 300 Metals & Mining index breakout above 4000 is likely, offering a target of 4200.

ASX 300 Banks

The broad index looks bullish but I have two concerns. First is the weak banking index, representing the largest sector in the ASX 200. Second, iron ore prices are weakening. Spot prices are testing support at $62/tonne. A Trend Index peak below zero looks likely, and would warn of strong selling pressure. Breach of support at $58 would signal a primary down-trend.

Iron Ore

GDP growth recovered to 3.1% for the year ending 31 March 2018, on the back of strong exports, but the overall report card for the economy remains weak.

June 8, 2018June 9, 2018

Gold benefits from Dollar weakness

The Dollar Index encountered resistance at 95 and is now retracing to find support. Support above 91 would be bullish, while breach of 91 would see another test of primary support at 88.50.

Dollar Index

10-Year US Treasury yields are likely to face stubborn resistance at 3.0 percent until threats to the European Union emanating from Italy’s new populist government are resolved. Breakout above 3.0 percent would signal the end of the 3 decades-long secular bull market in bonds — and increase selling pressure on gold.

10-Year Treasury Yield

Spot Gold, benefiting from the weaker Dollar, respected its rising trendline. Recovery above $1300/ounce would suggest another rally, while crossover of the Trend Index above zero would strengthen the signal.

Spot Gold

Australia’s All Ordinaries Gold Index continues its struggle with resistance at 5100, while the Aussie Dollar holds above support at 75 US cents. Penetration of the rising trendline at 4950 would warn of a correction to test primary support at 4600. Breakout above 5100 remains more likely, with a rising trend Index indicating moderate buying pressure.

All Ordinaries Gold Index

The Australian Dollar met resistance at its descending trendline, around 76.75 US cents. Expect another test of primary support at 75. If a Trend Index peak forms below zero, that would warn of strong selling pressure. Breach of primary support at 75 would signal a decline to 69/70 US cents — and strong demand for Australian gold stocks.

AUDUSD

June 2, 2018

Bi-polar ASX continues

Banks continue to threaten mayhem, with the ASX 300 Banks Index headed for a target of its 2016 low at 7200.

ASX 300 Banks

The second biggest industry group, Metals & Mining Index, however, remains in a primary up-trend. A long tail on the ASX 300 Metals & Mining weekly chart reflects support at 3800 and another test of 4000 is likely.

ASX 300 Banks

The ASX 200 continues to display a large bearish divergence on Twiggs Money Flow (13-week), warning of selling pressure. Breach of 5950 would warn of a test of primary support at 5650/5750.

ASX 200

I expect a gradual decline in the index unless mining falters. In which case all bets are off.

May 26, 2018May 26, 2018

Falling bond yields fail to tame Gold bears

10-Year Treasury yields retreated below 3.0 percent after threatening a bond bear market for the past week.

10-Year Treasury Yield

Breakout above 3.0 percent would complete a large double bottom reversal in the secular down-trend.

10-Year Treasury Yield

Rising bond yields would be expected to weaken demand for gold as the opportunity cost of holding precious metals increases.

The other major influence on gold prices, the Dollar, continues to strengthen. A strong Dollar would weaken the Dollar-price of gold.

The Dollar Index is rallying to test resistance at 95. Penetration of the long-term descending trendline in April suggests that a bottom is forming. Bullish divergence on the Trend Index indicates buying pressure.

Dollar Index

Spot Gold retraced to test the new resistance level at $1300/ounce — the former support level. The declining Trend Index indicates selling pressure and respect of the descending trendline would warn of a test of primary support at $1250/ounce.

Spot Gold

Australian gold stocks fared better, with the All Ordinaries Gold Index finding support at 4950 and the rising Trend Index signaling buying pressure. Respect of the long-term trendline would confirm another primary advance.

All Ordinaries Gold Index

The reason is not hard to find. The Australian Dollar is at a watershed, testing primary support at 75 US cents as the greenback rallies. A Trend Index peak below zero would warn of strong selling pressure. And breach of primary support would signal a decline to 69/70 US cents.

AUDUSD

Offering a potential bull market for Aussie gold stocks.

May 26, 2018May 26, 2018

Banks hurt the ASX

Banks face continued selling pressure as the Royal Commission progresses. The ASX 300 Banks Index broke medium-term support at 7700, confirming the primary down-trend and a target of the 2016 low at 7200.

ASX 300 Banks

Financials are the largest sector in the ASX 200. Materials, consisting of mainly Metals & Mining are second.

ASX 200
Source: S&P Dow Jones Indices

The ASX 300 Metals & Mining Index remains in a primary up-trend but threatens a correction to test the long-term rising trendline. Respect of the trendline is likely and would signal continuation of the up-trend. Breach of 3400 is unlikely but would present a bearish outlook, not only for Metals & Mining, but the entire ASX.

ASX 300 Banks

The ASX 200 is correcting to test medium-term support at 5950. Breach would warn of a test of primary support at 5750 but respect of support is just as likely. Breakout from the triangle on Twiggs Money Flow (13-week) will indicate the likely direction.

ASX 200

May 18, 2018

ASX 200 tug-of-war

At times it pays to look at the big picture. A monthly chart shows the ASX 200 recovering from 2 months of uncertainty (February – March), when the index broke its new support level at 6000. Recovery is almost complete, with the index testing the last level of resistance at 6150. Breakout would signal a primary advance but bearish divergence on Twiggs Money Flow (13-week) warns of selling pressure. Another test of support at 6000 is likely.

ASX 200

The ASX faces a bi-polar medium-term outlook with its two largest sectors headed in opposite directions.

ASX 200
Source: S&P Dow Jones Indices

Mining is going gang-busters with the ASX 300 Metals & Mining Index offering a medium-term target of 4200 after breaking through 3800.

ASX 300 Banks

But the largest sector, Finance, is in trouble. The impact of the Royal Commission is likely to slow bank lending growth and APRA’s efforts to raise bank lending standards will also adversely affect declining housing growth. The ASX 300 Banks Index remains in a primary down-trend, having broken support at 8000. Retracement respected the new resistance level at 8000 and breach of support at 7700 would signal a test of the 2016 low at 7200.

ASX 300 Banks

May 18, 2018

Gold stocks retreat

The Dollar rally continues, with the Dollar Index heading for a test of resistance at 95. Penetration of the long-term descending trendline suggests that a bottom is forming. Bullish divergence on the Trend Index indicates buying pressure.

Dollar Index

But rising crude prices still threaten to weaken the Dollar.

WTI Light Crude

Spot Gold broke support at $1300, warning of a test of primary support at $1250/ounce as the Dollar strengthens. The declining Trend Index indicates selling pressure.

Spot Gold

A weakening Australian Dollar continues to test support at 75 US cents as the greenback rallies. Breach would offer a long-term target of 69/70 US cents.

AUDUSD

The weaker Aussie Dollar offered some respite for local gold stocks but the All Ordinaries Gold Index is retracing to test its new support level at 4950/5000. Respect of the rising trendline would confirm a fresh advance and long-term target of 6000.

All Ordinaries Gold Index

May 18, 2018May 18, 2018

China sees red

From Darren Gray & Kirsty Needham at The Age:

Relations with China have taken another backward step after one of Australia’s biggest exporters, Treasury Wine Estates, was among several companies whose products were being stalled because of new customs rules targeting Australian companies and industries….

“Chinese officials have introduced new and different verification and certification processes and we’ve been working with the Chinese authorities and the officials, as well as with Australian authorities and officials, to ensure that we can meet these new and additional processes, which are not just applied to Treasury Wine Estates, it’s being applied to a number of other companies, across a number of different industries from Australia,” Treasury boss Michael Clarke said.

Australian Trade Minister Steven Ciobo said in Shanghai he had been informed of the situation by Treasury, the largest importer of foreign wine into China, in the past 24-36 hours.

“The questions being asked relate to certificates of origin. We will look at precisely what the situation is and if we can get to the bottom of it,” Mr Ciobo said.

….Amid a looming trade war between the US and China, and threatened punitive tariff packages worth hundreds of billions of dollars, American exporters have also reportedly encountered pre-emptive slow downs and extra scrutiny from Chinese customs in recent weeks.

China is attempting to use trade relationships to coerce trading partners into complying with their political demands, applying Lenin’s dictum “Probe with a bayonet. If you meet steel, stop. If you meet mush, then push.”

Australia faces a clear choice. Acquiesce and the trade issues will likely disappear…for a short time until China wants something else. Effectively we will become China’s southernmost province, responding to the will of the Central Committee in Beijing.

The alternative is a lot tougher: politely but firmly resist any pressure from Beijing and demand to be treated as an equal partner in international relations. The price is high but the rewards are far greater. Our freedom and independence.

May 12, 2018

ASX 200: Bi-polar economy

A sign of the economy’s good health is the largess distributed in Treasurer Scott Morrison’s recent budget, without wrecking the fiscal balance sheet. Net Debt is projected to peak at 18.6 percent of GDP in 2017/2018, with the budget returning to surplus in 2019/2020.

2018/2019 Budget Net Debt and Fiscal Deficit/Surplus
Source: Budget.gov.au

The ASX 200 is testing resistance at 6100/6150 despite the weakening Australian Dollar and troubled banking sector. Breakout above 6150 would signal a primary advance.

ASX 200

Led by the ASX 300 Metals & Mining Index. Breakout above 3800 signals a fresh primary advance, with a medium-term target of 4200.

ASX 300 Banks

But the ASX 300 Banks Index is in a primary down-trend, having broken support at 8000. Retracement that respects the new resistance level at 8000/8100 is likely and would confirm a primary down-trend with a medium-term target of the 2016 low at 7200.

ASX 300 Banks

We have a bi-polar economy, with Resources exports surging, along with Services and Rural (agriculture). Manufacturing exports are the only flat spot.

Export Volumes

But the banking sector faces challenges from a threatened housing down-turn, with near zero house price growth, and a regulator racing to shore up bank balance sheets before the bubble bursts.

Housing Price Growth

May 12, 2018December 5, 2018

Aussie Gold stocks continue strong run

The Dollar rally is slowing, with the Dollar Index running into resistance at 93, ahead of the anticipated 95. Penetration of the descending trendline suggests that a bottom is forming. Bullish divergence on the Trend Index indicates buying pressure. Retracement that respects the new support level at 91 would be a bullish sign. Breach of 88.50 is unlikely but would warn of another primary decline.

Dollar Index

Rising crude prices weaken Dollar demand.

WTI Light Crude

Spot Gold continues to test support at $1300. The declining Trend Index indicates selling pressure and a peak below zero would warn of another test of primary support at $1250/ounce.

Spot Gold

Australian gold stocks continue their strong run. Retracement of the All Ordinaries Gold Index that respects the new support level at 5000/5100 would confirm a fresh advance and long-term target of 6000.

All Ordinaries Gold Index

A weakening Aussie Dollar, testing support at 75 US cents, is driving local gold prices. Breach of support would offer a long-term target of 69/70 US cents.

AUDUSD