Risk back on as Europe and US surge, October Blue Chip launch day, ASX futures priced it in yesterday - no change

As you can see in today's first chart, the tail wagged the dog yesterday, as moves higher on Australia's ASX 200 pushed well ahead of the US S&P 500 futures market and pre-empted what was a big night for global share indices. The black line in the chart shows the ASX 200 jumping out of the blocks at 9:50am yesterday to be at one point outperforming US S&P 500 futures by 1.42%, eventually closing out the day session over 1% higher than the US futures. Yesterday's day session performance of 2.1% was second only to Japan in the Asian region and that meant that last night's futures didn't rise given that the S&P 500 was 1.91% higher overnight. I suspect some big foreign money assumed that a rally was coming in Europe and the US yesterday and looked for the only market big enough to take on their bets, so we might see some moderate performance day as profits are taken from yesterday's big move.

So let's take stock of where we're at - our market closed yesterday at 5,022 and while this is was a big move higher for the day, in the context of the medium-term it doesn't really change the outlook a whole lot. In today's second chart you can see that yesterday's move only reclaimed about half of the fall that we experienced on Tuesday. We remain in a short-term bear market and need to close at least higher than 5,150 in order to shake the downward vibe or above 5,200 to feel more confident of higher trending moves to come.

Finally I've plotted the AUDUSD currency pair, which remains elevated from its early September lows. Technically, the AUDUSD looks to be making some 'higher lows,' being that it is not experiencing lows with the depth of the 7 September low and therefore is bolstering the view that this recent low of US$0.6896 constitutes major support and traders are unwilling to surpass that low, even with the intensity of Tuesday's risk-off move. If it is the case that buyers and sellers in this market have hit a point in the market where they feel Australia's currency is no longer a screaming sell, then this should augur well for Australian equities as well.

A reminder to everyone who wants a simple strategy to 'buy this depressed market' - the Rivkin Local Blue Chip Strategy for October will be released today! Phone 1300 748 546 now and ask for a Rivkin Local membership, which starts at just $37 per fortnight. The Strategy update will tell you everything you need to do to own 10 of Australia's highest-yielding blue chip stocks. Email customerservice@rivkin.com.au for more information. 


Source: Rivkin, Saxo Bank

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
comments powered by Disqus

DISCLAIMER: Rivkin aims to provide clear and simple information to those visiting our website. If any part of this disclaimer does not make sense, please phone Rivkin and ask to speak with a member of our Dealing and Relationship Management Team. Rivkin provides general advice, securities and derivatives dealing services and accounting administration services. Rivkin does not provide advice that takes into account your, or anybody else's, investment objectives, financial situation or needs. We strongly suggest that you consult an independent, licenced financial advisor before acting upon any information contained on this website. Investing in and trading securities (such as shares listed on the ASX) and/or derivatives (such as Contracts for Difference or 'CFDs') carry financial risks. CFDs carry with them various additional risks that differ from more simple securities such as fully-paid company shares. Some of these risks include not owning the underlying instrument from which a price is being derived, settling trades 'over the counter' with a financial institution rather than on a stock exchange, and using leverage to gain access to trades that may have a higher face value than your initial deposit. This risk of leverage means that it is possible to lose more than your initial investment. Our aim is to create more life choices for our clients, which means improving the wealth of clients throughout many market cycles by nurturing a relationship spanning many years. If you are not comfortable with your understanding of the risks involved before using a Rivkin product and service, please contact our office to seek further information or a Product Disclosure Statement, or make an appointment to sit with one of our friendly financial experts. It is in our interest for your Rivkin experience to be a rewarding and comfortable one. Rivkin is a trading name of Rivkin Securities ABN 87123290602, which holds Australian Financial Services Licence No. 332 802.