US Fed rate has been cut to virtually zero, lowering its target federal funds rate from 1.0 per cent, already at a historic low, to a range of zero to 0.25 per cent.
Locally, the ASX looks to have a strong open on this lead after consolidating the past week.
Sounding like a broken record but another good lead from the US (DOW, S&P 500 and NASDAQ all up over 3%), but this time the ASX could not manage to follow through. The S&P 500 looks to be testing the 50MA, so the next couple of days should be interesting, especially to see if the market can shake off any further bad news.
Bad news seems to be plentiful for the Australian Market
* Commonwealth Bank to sell $1.25bn in 3 and 5 year bonds (CBA down 8%)
* Wespac raises $2.5bn capital
* Pacific Brands cut dividend forecast by about 65 per cent
* Panel of economists give Australia a 40% chance of entering a recession
Good news included
* Resources up after higher commodity prices (with BHP Billiton rising 4.51 per cent to $28.45, and Rio Tinto lifting 3.95 per cent to $33.35, while fellow iron ore miner, Fortescue Metals Group, rode the wave, climbing 7.33 per cent to $2.34)
* Three sources indicate potential Chinese suitors for Oz Minerals (OZL)
Trends*
Long Term - Down
Intermediate - Down
Short Term - Up
*10MA, 30EMA and 200MA used to determine trends
XJO - ASX 200
After a good lead from the US (DOW, S&P 500 and NASDAQ all up over 3%) shaking off some negative job data, our market has followed through with a 4% gain, also shaking off the ANZ job ad numbers. XJO ended the day at 3631.60 (up 4.06%).
Some other of the negative news out today which the market seemed to ignore include;
BHP may require to cut iron ore production
RIO could cut thousands of jobs
Harvey Norman (HVN) warned some of its stores could close
Trends*
Long Term - Down
Intermediate - Down
Short Term - Up
*10MA, 30EMA and 200MA used to determine trends
XJO - ASX 200
After a good lead from the US (DOW, S&P 500 and NASDAQ all up over 3%) ended the day flat, but not before riding the
days roller coaster. High of 3621 on open, low of 3499 just before lunch, back up to 3605 a couple hours before close
to finally finish at 3533.
Chart mainly un-changed with what looks like a new swing low after failing to breach the 50% retracement mark.
Stocks to watch on close
Trends*
Long Term - Down
Intermediate - Down
Short Term - Neutral
*10MA, 30EMA and 200MA used to determine trends
XJO - ASX 200
XAO - ALL ORDINARIES
The XJO closed 3742, above the low of the 28/11 of 3724, but still below the 50% retracement of 3777. The story of the XAO with a close of 3672 shows a similar story but below the 28/11 low of 3693 and 3760 50% retracement.
The market will test this area, probably on Monday after a strong close of the week for the DOW and S&P 500 (NASDAQ flat). Respect of this level(s) will indicate the continuation of the down swing.
BHP - BHP Billiton
A great week for the bug Aussie, approaching the $31.00 mark with volume. Still in a short term, medium term and long term until proven otherwise.
Short term resistance at 38.2 Fib level. Breaking this, looking at next level which is coincides with the 50% Fib and low on the 28/10.
Great read for people interested in BHP. BHP is one of my favorites for my long term portfolio.
"As a result of the board’s decision, BHP is going to emerge from this episode in the commodity cycle in a position even stronger than the one in which it went into the bullmarket in commodities."
"BHP, with minimal debt and strong cash flows, will be able to absorb whatever pain the downturn generates"
Yesterday Oz Minerals sent a six page statement to the ASX detailing hundreds of millions of dollars of changes and cuts.
OZ Minerals says not only has it deferred a number of development projects and has entered negotiations to refinance debt.
Martabe gold project in Indonesia : suspended
Sepon Copper Project in Laos : deferred work until after 2009
Dugald River zinc project in Queensland : not commence until 2009
Izok Lake and High Lake project in Canada : deferred feasibility studies
Source
The bids off for RIO, according to the latest release by BHP. Citing worsening market conditions and divesting demands from the European regulators, the $US66 billion ($A104 billion) bid has been pulled sending RIO price down 37% in early London trade.
Marius Kloppers, BHP Billiton’s CEO, said:
“We have previously said that similar cultures and the overlap of key assets and
infrastructure make this a compelling combination. Recent global events and associated falls in commodity prices have, however, altered risk dimensions. BHP Billiton is very focused on balance sheet strength. Accordingly, the greater debt exposure of the combination plus the difficulty of divesting assets have increased the risks to shareholder value to an unacceptable level.“
In a statement release the same day, BHP has also approved a $US4.8 billion ($A7.35 billion) investment to expand its iron ore operations in the Pilbara by 32 per cent to 205 million tonnes per annum. With substantial uncertainty in the short term outlook of iron Ore, this is confidence boost to the long term view held by BHP.
Speculation has commenced on many forums relating to the direction BHP will take from here. Included are; Wait for RIO to continue to fall and initiate a new offer at a cheaper price, purchase other mid-tier producers or near term producers, Make a play for oil producer WPL and/or make a play for iron ore producer FMG.
More likely short term initiatives may include share buy back, or a new direction to sit on cash until the financial turmoil eases.
XJO - ASX 200
BHP - BHP
AMP - AMP
Respecting the 100MA and looks to be forming a triangle, looking for a break lower.
XJO - S&P ASX 200
XJo showing signs of weekness again with the current trend line being broken. Looking at 100MA for support now.
XJO - S&P ASX Financials
XFJ was a great short on the 22nd of May. 100 MA resisted the uptrend and also broke the current uptrend.
Please see my Blog discussing setting a stop loss . The latest post is using ATR as a stop loss.
Read more...XJO - S&P ASX 200
As displayed in my last post , the XJO was sitting right on a current trend line. This line has since been breached. XJO now lookig for support at the 100MA, and the 32.5% Fibonacci Retracement.
On the 5/4/2005 Colin Twiggs indicated potential resistance at the 5900-6000 level which looks to be playing out.
"The All Ordinaries broke above short-term resistance at 5450 on heavy volume and is headed for a test of resistance at 5900/6000. Resistance is expected to hold because of the bear market, but continued advances on strong volume would increase the chance of a breakout. "
"
XJO - S&P ASX 200
XJO sitting right on its current trend line.
CMR - Compass Resources
Second pullback for CMR after breaking out. Optimal entry would have been the first pullback after breaking the 100MA.
AGO - Atlass Iron
After a sharp stron volume rally, prices have pull back on weaker volume. Looks to be forming a bullish pennant.
FLT - Flight Centre Limited
Swing low in October 2007 and March 2008 was broken with a 7% fall on the 5th of May. FLT has since retested this breakout and looks like it has held. Possible resistance around $18.
My watch list for the week
ABY - Aditya Birla Minerals Limited
After breaking out on the 19/04/08, ABY has been cosnolidating. Look for a break of this trading range.
BBP - Babcock and Brown Power
Higher highs, and lower lows ... also has broken the 100MA with ADX showing signs of a trend. Look for a pullback between the 10MA and 30EMA for another entry.
NAB - National Australia Bank Limited
The strongest chart if the big 4 banks, currently trading above the 100MA. ADX starting to move above 20 suggesting a start of a new trend.
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