ASX 200 Recovers with Global Markets

• ASX 200 rallies significantly on Wednesday.
• 200-Day EMA holds as support in ASX 200.
• Financials continue to show volatility.

During the Wednesday session we have seen a general “return to risk on behavior” around the world. This included the ASX 200, which managed to jump above the AU$7700 level. Because of this, the market is likely to continue to look at this through the prism of an attempt to continue the overall rally, but ultimately the market is also going to have to focus on the fact that the situation is still somewhat uncertain.

It is because of this that it is more crucial than ever to pay close attention to the interconnectivity between global indices. For example, if the Americans rally, then it is very possible that the Australians will continue to do the same. The size of the candlestick certainly does suggest that we could continue to go higher, and with that being the case traders will be paying close attention to various indicators. The first thing that comes to mind would be the 50-Day EMA, followed by the AU$7900 level, an area that previously has been important.

Despite all of the noisy behavior, although we have seen is the market reenter the previous consolidation area, which is quite common with technical analysis. All of that being said, it’ll be interesting to see whether or not this is a market that can pick up its momentum, or if it pulls back. It does in fact fall from here, traders will keep in Kenai on the AU$7500 level. Anything below there would almost certainly cause a significant amount of selling pressure.

Financials

Financials have not necessarily had a good run a bit over the last 24 hours, as we have seen the Commonwealth Bank of Australia (CBA) drop 27 basis points, and the National Australia Bank (NAB) lose 88 basis points. This is in sharp contrast to many other sectors, but it does seem like the financial sector has been one of the least favored.

Consumer Discretionary and Staples

Several consumer discretionary names have done fairly well, as Aristocrat Leisure (ALL) gained 18 basis points, but Wesfarmers (WES) did even better, gaining 71 basis points for the session. As far as consumer staples are concerned, we have seen Coles Group (COL) rally 0.62%, Woolworths (WOW) end the session unchanged.

Global Markets

Global markets of course are all interconnected, and therefore it makes a certain amount of sense that we would continue to see global markets push each other around, and as traders of Australian equities will almost certainly be paying close attention to the S&P 500, the NASDAQ 100, FTSE 100, text, and of course the Nikkei 225. The Americans certainly seem to be trying to pick up the ball and run with that, and that could bring in quite a bit of upward pressure in this market if it continues. On the other hand, if selling pressure starts to pick up, it makes a certain amount of sense that the ASX 200 will not be immune. Volatility will continue to be a major issue here, just as it is everywhere else.

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