ASX Equity Morning Report 24/09/2012

Overnight Market Snaphot

My observations below should be viewed as general advice and may not be right for you.

 

US equities got off to a positive opening with quadruple witching leading to a volume surge at the start of the day. However, the indices made their highs within the first few minutes of trade, the major averages spent the rest of the day drifting towards the unchanged line. As a result the S&P 500 and the Nasdaq 100 finished flat

Iron Ore pulled back, closing -2.47% to $106.40. Gold also staged a rather bearish reversal right out of the 1790/1800 resistance zone. Indeed, the December contract spiked from $1778 to a high of $1790 come the open of US trade, but couldn’t hold onto gains and sold off right back into the previous range, closing at $1774.

On Friday, I was looking for a retest of the 1475 highs but the S&P500 fell short of this. The short term trend remains up and unless the 1450 level breaks to the downside, I continue to believe the market can grind higher into month end. Certainly there are a number of indices that are beginning to look stretched and tired but focusing on this uptrend in the US market is key for now.

S&P500 15mins:

Short term trend remains up. I continue to look at this short term range from 1450 support to 1475/1480 resistance

Emini S&P500 December Key Levels:

Support Levels: 1445, 1430, 1415

Resistance Levels: 1465/1470

OZ Stockwatch

Eco Calendar:

No Major Economic announcements in Australia today.

Corp Calendar:

CAB: Ex-div

CMJ: Ex-div

CWN:Ex-div

MYR: Ex-div

NCM: Ex-div

PNA: Ex-Div

SVW: Ex-Div

TRS: Ex-Div

NUF: FY Earnings

Analyst Rating Changes:

FMG: Cut to Hold from Buy at E.L. & C. Baillieu

News:

BKN: 2012 Annual Report

CBA: Offers cash to lure home loans from other lends.  (AFR)

FMG: The company is considering a sale of minority stake in Chichester iron ore operations which
may be valued at more than $2 billion. Teck Resources, which holds 2.94% of Fortescue, is seen as most likely buyer. (AFR)

KAR: The Company executed final agreements to buy 100% stake in WA-482-P in North Carnarvon Basin from USA Independent Liberty Petroleum.

WHC: Mark Carnegie considers a loan to Nathan Tinkler to settle dispute with Mirvac. (AFR)

Technical:

-Price/Vol scan and Bullish price action: AMX, AZH, KDR, KDL, MBN, ORE

-Price/Vol scan and Bearish price action: AAX, NCM, NST, ORG, WPL

-Breakouts plays: AWC, AUT, MBN, SFR

ASX200 and SPI Analysis

My observations below should be viewed as general advice and may not be right for you.

My SPI Range today: 4395 to 4430. Outlier levels 4385 support and 4450 resistance.

My SPI plan today: SPI futures closed at 4410 overnight after hitting a high of 4424 overnight. The Emini S&P500 futures have opened +1 point from Fridays close and the Australian Dollar has opened relatively unchanged from Fridays close. 

The market remains in a short term uptrend and remains well supported at the 4400 level. As long as this level can hold early today, I still believe the risk is to the upside and a retest of the 4450 May highs is on the cards. The key short term resistance level remains 4430 and this needs to be broken for a breakout into the latter zone. No doubt some stocks are beginning to look tired after recent strong run ups but I am not seeing any climatic topping patterns (Energy sector aside). 

My key early short term support zone is 4405 to 4400. I am looking for dips into this support zone for possible long setups. Any failure to hold this zone early opens up a retest of 4390 which should be strongly defended. Only breaks below this level open up a potential trend change and deeper move lower. Thus traders could look to buy supports early with tight stops and if there is stronger than expected weakness, look for join the move lower.

On the upside, the targets for any early strength are into 4430. I do think we can continue to break through this and challenge the 4450 highs in times. Traders looking for a climatic reversal should use bearish confirmation out of the 4445/4450 zone for possible short setups.

XJO Daily:

The market remains in a solid uptrend but needs a confirmed breakout above the top end of the range to confirm a more meaningful move higher. We are now testing the May 2012 highs.

XJO 15mins:

The market is testing and holding a key support level here. The trend remains up as long as this can hold and I am looking for short term targets into 4450.  

Stock Charts of Interest

Please feel free to contact me if you would like help or assistance in interpreting the graphs below. You can also follow me o twitter @FP_markets for live commentary throughout the day.

WPL Daily: Breakdown through support and possible topping pattern.

On Friday, the stock opened strongly given the positive bounce in Oil but made its high in the first 15minutes and trended lower for the rest of the day. This is bearish price action. A breakdown through 34.00 could trigger this Head and Shoulders pattern. 

CCL Daily: Potential topping pattern. 

BHP Daily: Strong base pattern and confirmed breakout

Breakout from a strong base pattern and retest of support. Targets for this move are as high at 37.50 to 38 in due course. Risk would be on a close back below 33.00

MBN Daily: Breakout from base pattern.

The target for this move could be as high as 50 to 55c in coming days.

AUDUSD
The Australian dollar climbed strongly during European trade on Friday night but struggled to break through the 1.05 resistance zone. With the pullback across risk assets, the Aussie slipped from a high of 1.052 to close at 1.044. 

From a technical perspective, as long as the Australian Dollar can hold above the 1.0380/1.04 support zone in coming days, I believe there is potential for continued strength and a resumption of the uptrend. Confirmation will come on a breakout ABOVE 1.05 as I stated on Friday.

AUDUSD Daily:
A breakout above this downward trendline is needed for confirmation of a more meaningful move higher. 

AUDUSD 60mins:
There was an attempted breakdown through my support zone yesterday however there was no follow through to the downside. This potentially sets up a bear trap but I would want to see more strength for confirmation. 

If you would like to chat live and interact daily with a Senior FP Markets trader, please go to http://www.cfdtradersedge.com.au/. In his lives chat room up to 50 full and part time active traders share market observations throughout the trading day. This is an invaluable source for active ASX traders.

 

 

Contact:

Austin Mitchum. Senior Market Analyst

First Prudential Markets

Email: a.mitchum@fpmarkets.com.au
Office: +61 2 8252 6800 Ext 120
Mobile: +61 0431547026