Breakout Above 4400 Today?

Overnight Market Snaphot

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

 

Trading in US indices was rather uneventful and rangebound for the majority of the session, as the market consolidated recent gains. The major averages showed some divergence as the S&P500 shed 0.2%, the Dow Industrial adding 0.1% whilst the Dow Transportation Averaged fell 1.1% due to disappointing guidance from Fed Ex

Stocks within the consumer staples sector were the top performer of the day whilst Energy and Materials underperformed. 

From a technical standpoint, my comments from last night futures report remain valid:

“...given the strong upward trend and recent breakout, the higher probability trade remains buying into supports. The key support zone I am looking at tonight is 1455 to 1450 and this could offer a good risk/reward entry. Only breakdowns below 1440 and the previous breakout zone would put this in jeopardy. The target for any bounce is a retest of the 1475 spike high for now. “

 

Emini S&P500 15mins:

This is the short term support zone at 1450 to 1455 that I am looking at

S&P500 Emini Key Levels

Support Levels: 1450/1455, 1440, 1420/25

Resistance Levels: 1475/1480, 1515

ASX200 and SPI Analysis

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

My SPI Range today: 4390 to 4435. Outlier levels 4380 support and 4350 resistance

Please note that the SPI September futures contract expires this Thursday.

My SPI plan today: SPI futures closed at 4398 overnight after hitting a high of 4380. This 4380 was my key support level identified yesterday and clearly this remains well defended.

Another positive move in Iron Ore (+4.28%) and Commodities bodes well for sentiment coming into today. I actually think there is the possibility of a breakout higher today. Price has clearly been consolidating at the top end of the range at 4400 and the ability for the market to hold recent gains is a positive. 

The key short term resistance is 4410 and I will be looking for breakouts ABOVE here for confirmation of thrust higher into 4430/4435. The previous ASX200 highs come in at 4450 and this is the ultimate target but this could well be a push today. Key support comes in around 4390 first thing with 4380 as the line in the sand. Thus traders could look to these levels for possible long scalp opportunities. Only a break below 4380 would be bearish and put the recent uptrend in jeopardy. If this does break, have a game plan ready.

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.

SPI 15mins:

The SPI is consolidating at the top end of the range. This is positive as long as 4380 holds. Breakouts above this pennant pattern open up a retest of the ASX200 highs at 4450 area. 

OZ Stockwatch

Eco Calendar:

10.30am AUS    Westpac Leading Index MoM

Corp Calendar:

ASX: Div payment

BBG: Ex-Div

DJS: FY Results

News:

BHP: The Company yesterday announced that the base salaries of more than 100 senior executives would be frozen for the current financial year as part of wider attempts to reduce the global miner's expenditure in a difficult environment

FMG: Iron ore producer Fortescue Metals Group may reactivate its expansion plans after the company yesterday announced it had struck a US$4.5 billion financing arrangement with investment houses Credit Suisse and JPMorgan.  Chief executive Nev Power said that Fortescue would decide by the end of the year whether to proceed with the currently abandoned  Kings project which would see its output increase by 40 million tonnes annually, a venture that would noticeably lower the company's production costs

IAU: The company says it is unaware of any info that could account for recent trading activity; shares up 48% in past days

MAH: Shares remain halted since Monday pending earnings forecast update from the company

NAB: Group executive of wealth Steve Tucker yesterday announced that the lender would target
rival Commonwealth Bank of Australia's successful Commsec online brokerage in a bid to increase its market share.

NHC: Shares rose 37c to $4.55 yesterday after impressing the market with its full-year results. Net profit came in at $167.1m and a special 20c dividend was announced. CEO Robert Neale said the company was well positioned to move on acquisition opportunities that would be immediately earnings accretive.

WDR: Chinese steel manufacturer Meijin Energy has submitted a  A$435 million takeover bid for iron ore, gold and copper explorer Western Desert Resources.  The A$1.08 a share offer is  set to be recommended by Western Desert's board, pending a review from an independent expert.

Technical:

-Price/Vol scan and Bullish price action: AQP, CSR, GRY, IAU, KAR, LNC, MCR, SFR,

-Price/Vol scan and Bearish price action: ASL, CCL, MND

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.

GRY Daily: Breakout from a strong base pattern.

Strong price action once again yesterday. The target for this move is up to 1.00 in the short term.

NHC Daily: Breakout from bullish consolidation pattern.

Yesterdays strong breakout candle triggered this base pattern. This stock has held up very well despite a weak coal price and the recent raising of Queensland royalties. A stock which can shrug off this kind of news is indicative of underlying strength.

BHP Daily: Strong base pattern and confirmed breakout

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

FMG 60mins: Testing key overhead resistance. Breakout trade above

This is the short term resistance zone I am looking at.

AUDUSD
The Australian dollar declined yesterday versus its U.S. peer after the central bank said the strength of the currency and slowing Chinese growth are risks to the economy, minutes from a Sept. 4 meeting showed. However, price stabilised right into the support zone shown yesterday and managed to build on gains during New York Trading, reaching a high of 1.046.

In the short term, the Aussie has now pulled back into a great support zone at 1.040 to 1.0430. This could be formidable and a great low risk entry into the uptrend looking for a retest of the 1.06 resistance level. Only a confirmed breakdown through here would make me concerned regarding the bullish scenario.

AUDUSD 60mins:
Retest of the key support zone yesterday which held. Need to see a push above 1.049/1.050 to confirm a more meaningful turn and resumption of the uptrend into 1.06.

AUDJPY 60mins:
The 82.00 also proved to be strong support yesterday. Traders could continue to follow the trend higher as long as this level holds.

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