Gains in Europe and the US push S&P 500 within reach of 2,000, ASX futures up 32 points

The mood among Australian investors should remain buoyant today as the rising tide of global equity markets lifts us out of and away from vulnerable key ASX 200 levels. We've been talking a lot about the zones on the ASX 200 where we feel 'bullish' or 'bearish' and with yesterday's close of 5,198 sitting well above the region that we want to remain above in order to feel positive about this market (5,100-5,125), investors have reason to feel at ease coming into the end of the week. As discussed yesterday, I'd like to see the US S&P 500 index lift and close above 2,000 so it can chew through the selling resistance that, as you can see in today's second chart, it has now come up against for the third time in six weeks. When a market repetitively hits resistance like this, it generally increases the potential acceleration of a move if it does eventually break through the resistance.

Following on from yesterday's AUDUSD commentary, I've left the third chart untouched today to show its progress as it moves slowly through a patch of selling around the US$0.72 price and we will now look for it to break above US$0.7250 and hold that level in order to trigger short covering (this is when bearish traders are forced to buy back their positions to close them, which has the effect of pushing instrument prices higher) and hopefully extend the current upward trend.

Oil markets eased just 1% last night following their 6% rise the night before, which will have the effect of bolstering Aussie oil stocks which might have been at risk from profit taking today if the jump in the oil prices had have faded away. As suspected, Woodside Petroleum (WPL) did indeed perform well yesterday, closing on its highs at $32.10, up $1.81 or 6%. Copper moved 1.2% higher overnight, which has it sitting higher on a rolling 5 day and monthly basis - a good sign for global economic health.


Source: Rivkin, Saxo Bank

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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.

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