Posts Tagged ‘US markets’

Bulls Remain In Control as Markets Make New Highs

Friday, May 17th, 2013

Weekly Market Wrap

Stock markets have been strong again this week, with many making new all-time highs. The US and German markets have been particularly impressive, and Japan is at 4½ year highs. Trader sentiment has been buoyed by speculation that soft economic data will firm the resolve of the central banks’ commitment to continue their stimulus programs.

Closer to home, the Federal Budget was handed down with a $21 billion turnaround, but this did not affect the equities market. Nevertheless it has been a terrible week for mine services companies with a number reporting profit downgrades and subsequently seeing their share prices punished. The mining sector has suffered from the weaker commodity prices, with gold cracking below the $1,400 level and iron ore prices now down over 20% from February highs.

US stock markets are hovering around new all-time highs. Traders have responded positively to soft employment, housing and manufacturing data, as the Fed Chairman Ben Bernanke confirmed that the US Federal Reserve will continue its unprecedented stimulus until the jobless rate falls to 6.5 percent or inflation rises above 2.5 percent. However overnight we saw some profit-taking as the Federal Reserve Bank of San Francisco President said the central bank may begin slowing the pace of its $85 billion in monthly bond-buying amid signs the economy is gradually gaining strength.

The Dow Jones has remained above the 15,200 level. The S&P500 again held at the 1650 level near all-time highs and has closed higher for nine of the last eleven trading sessions (up 16% for the year). Nearly 200 of the S&P 500 stocks are at 52-week highs, the most since 1993. The gains have been broad based as over 85 percent of S&P 500 stocks are trading above their 50-day moving average, according to Bloomberg (the highest level since 14 March).

European stock markets are hovering around 5-year highs. The Europe Stoxx 600 is up 10% for the year and is at its highest level since June 2008. It is clear that the ECB will remain supportive of equities going forward. Across the region the commodity related sectors weighed again, after JPMorgan lowered its forecast for Chinese 2013 gross domestic product growth to 7.6 percent from 7.8 percent, citing weak domestic demand. Traders also received confirmation that the eurozone is suffering its longest recession since the GFC, as a Eurostat report showed the eurozone economy shrank more than economists had forecast, extending its recession to a record sixth quarter as GDP fell 0.2 percent in the first quarter, after sliding 0.6 percent in the final quarter of 2012. The longest recession since 2000 is the 15-month long contraction in 2008-2009.

The German market held a new all-time high and is up 10% for the year. In London traders pushed the FTSE to its highest level since December 2007, after the Bank of England said that an economic recovery in the UK is now “in sight”, predicting that growth will accelerate to 0.5 percent in the second quarter from 0.3 percent in the first three months of the year.

Asian stock markets have held on to recent gains, hovering around 5-year highs. The MSCI Asia Pacific Index is up 10% for the year and is on track for the longest winning streak since September 2009, on optimism over central bank stimulus, Japan continuing to deploy more measures to beat deflation and as centrals banks remain supportive in the US and Europe. In Japan the market held above 15,000 at 4½ year highs, on the back of a weaker yen. The pullback was despite Japanese GDP surprising, rising an annualised 3.5 percent in the three months through March, the most in a year (better than the forecast 2.7%), while fourth-quarter growth was revised to 1 percent. The Chinese market saw some bargain hunting, having its best gain in 2 weeks, as the Shanghai Composite is now only down -0.8% for the year, having fallen around -9% from its February peak. Of the around 420 companies on the MSCI Asia Pacific Index that reported their latest quarterly results since April, 53 percent have beaten analyst forecasts, according to Bloomberg.

In today’s Analyst’s Eye we discuss what happens if you get caught on the wrong side of a gap trade in Mind the Gap.

The month of May has ended lower in the past three straight years, but according to a study done by Goldman Sachs the market has never been down for four consecutive months of May in the past 80 years and the bulls are succeeding in providing support this month so far.

The Aussie market is still hovering around 5-year highs, even as the materials sector gave back half the prior week’s gains, on the back of weak commodity prices. The finance sector has held on to gains as the chase for yield has pushed that sector 10% higher in the past six weeks and the telecom and property sectors have enjoyed a similar outperformance.

The market has held around the 5200 level and this level will be key for next week. Once again the All Ords is testing the key 5160 level. The ASX200 market is flat for the week having bounced off the 5150 level. The main drivers have been banks going Ex-dividend and the weak commodity prices which have hurt the materials sector, downgrades from the mining services sector, and the Federal Budget.

ASX XJO

Key levels for the ASX200 index next week will again be 5100 and 5250, with 5160 the key near term pivot level. Volatility remains relatively subdued, affording cheap protection for your portfolio. We are holding above the 13-day moving average and this level will be key for the trading in May.

Protection is still relatively cheap and investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (corporate earnings), China (stimulus) and the US (corporate earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Markets Ride the Stimulus Wave to New Highs: Weekly Market Wrap

Friday, May 10th, 2013

Traders have continued their buying this week, after confirmation of continuing global stimulus at central banks and even the RBA has joined the party. Stock markets have been strong with many making new all-time highs, particularly the US and German markets. Trader sentiment has been has been buoyed by promising economic data and the renewed commitment from the central banks to continue their stimulus programs.

In Australia the RBA surprised many by cutting the cash rate to a record low of 2.75% and signalling that slowing inflation gives it room to ease policy. The futures market is predicting a better-than-50 percent chance the RBA will lower its benchmark interest rate in July. The unemployment rate fell to 5.5 percent in April, as the economy picked up more than 50,000 new jobs (34,500 full time), making up for a drop in March. However there are concerns over the accuracy of the figures.

US stock markets continue to make new highs, with the S&P 500 up for five of the past six sessions and the Dow Jones is closing at another record close above 15,000 after better-than-estimated earnings reports. The three benchmark indexes have all edged higher by around 1.4% this week, building on the gains of the prior two weeks. The Dow Jones held above the 15,000 level again, while the S&P500 again closed above the 1600 level for another all-time high. The gains have been broad based as over 80 percent of S&P 500 stocks are trading above their 50-day moving average, according to Bloomberg (the highest level since 13 February). Of the over 430 S&P 500 companies that have reported their financial results so far this season, 71 percent have beaten estimates for profit and 52 percent have exceeded forecasts for sales, according to Bloomberg. Earnings at S&P 500 companies have risen 1.1 percent in the first three months of the year, significantly up from the analysts’ forecast fall of -1.4%.

European stocks markets have traded higher this week, reaching highs not seen since mid-2008. The Europe Stoxx 600 is up 8.6% for the year, with the Financials and Materials sectors the best performers for the region. It is clear that the ECB will remain supportive of equities going forward. Supporting the positive sentiment was news that German industrial production increased for a second month in March and production rose 1.2 percent from February. This was on top of the Chinese report from the General Administration of Customs that showed that exports rose 14.7 percent in April. The German market has traded at a new all-time high, while in London the FTSE closed around its highest level since December 2007, with the BoE leaving rates on hold. The French CAC has held near its highest level since mid-2011.

Asian stock markets have performed well this week, as Chinese traders pushed the market to 2-week highs. The MSCI Asia Pacific Index is hovering around 5-year highs. The index is up around 10% for the year and is still on track for the longest winning streak since September 2009, on optimism over central bank stimulus.

The Japanese market is up 37% for this year, holding above 14,000 level due to speculation the Bank of Japan will deploy more measures to beat deflation as policy makers in the US and Europe remain on standby to stimulate growth. The Chinese market is easing back from 2-week highs, as Chinese CPI rose 2.4 percent for the month, while producer prices fell 2.6 percent, this was in contrast to the previous session’s data that showed Chinese exports rose 14.7 percent in April, much better than the 9.2 percent forecast, while imports jumped 16.8 percent in April, again much better than the 13 percent forecast.

In Hong Kong the market also eased on the Chinese CPI/PPI news. The Korean market jumped after its central bank also cut interest rates. Of the around 300 companies on the MSCI Asia Pacific Index that reported their latest quarterly results since April, 51 percent have beaten analyst forecasts, according to Bloomberg.

In today’s Analyst’s Eye we discuss how you can be Bullish On The Cheap. The month of May has ended lower in the past three straight years, but according to a study done by Goldman Sachs the market has never been down for four consecutive months of May in the past 80 years, which suggests that the bulls will prevail this year based on probabilities. Remember protection is still relatively cheap!

The Aussie market is hovering around 5-year highs, as the materials sector has surged 6% and the chase for yield has pushed the finance sector 10% higher in the past six weeks and the telecom and property sectors have had a similar outperformance.

The market has held around the 5200 level and this level will be key again for next week. Once again the All Ords is testing the key 5180 level. The ASX200 market is up around 1.5% this week having bounced off the 5100 level. The main drivers have been the upcoming dividends from the banks and the recovery in the commodity prices which has helped the materials sector to join in on the rally, as the RBA surprised with a 25 basis cut, with interest rates now down at a record low of 2.75%.

100513_axjo11

Key levels for the ASX200 index next week will be 5100 and 5250, with 5160 the key near-term pivot level. Volatility remains relatively cheap, affording cheap protection for your portfolio. We are holding above the 13-day moving average and this level will be key for trading in May.

Remain attuned to the news from overseas, particularly from the eurozone (corporate earnings), China (stimulus) and the US (corporate earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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ASX Markets Trading Just Above Support Following Torrid Week

Friday, April 19th, 2013

Stock markets sold-off sharply this week on the back of plunging commodity prices, with the gold price plunging more than it has in decades, and after economic growth forecasts were marked down.

Global markets suffered as recent Chinese economic data sent shivers through the resources sector. GDP growth unexpectedly slowed to 7.7% year-on-year in the 1Q of 2013, lower than the 7.9% in 4Q 2012 and lower than the 8% forecast. Industrial production rose 8.9% in March from a year earlier (less than forecast).

Trader sentiment was weighed down by weak commodities prices and as the International Monetary Fund (IMF) cut its global growth forecast, trimming its prediction for this year for a fourth consecutive time, saying the global economy will expand 3.3% this year (down from 3.5% forecast in January). The IMF urged European policy makers to use “aggressive” monetary policy as a second year of contraction leaves the eurozone recovery lagging behind the rest of the world.

The US markets have retreated from their new all-time highs, on the back of disappointing corporate earnings. Asian markets are trading at 3-week lows and even the Japanese market has retreated from its 55% gains since its November lows, while in Europe the markets are trading at 4-week lows and are looking vulnerable, with the Europe Stoxx 600 down -3% for the week.

In today’s Analyst’s Eye we discuss how you can short stocks with limited risk. Caution is advised in the April-May period, especially given the spectacular run markets have had this year. The S&P 500 declined -7% on average from May to August in the last three years, according to UBS data.

The Aussie market is hovering not far from its lows for the year, as the materials sector was smashed after commodity prices plummeted, led by the falls in the gold price as the margin callers came a knocking.

The market is just holding above its recent 4880 low-point, but if this support breaks it will confirm a change in trend. Once again the All Ords has been unable to hold above the key 5000 level. The ASX200 market is down around -2% this week having retraced from the 5000 level. The main driver has been the news of slowing global growth which triggered a sell-off in commodities and in any equities related to the resources sector.

ASX-200-Chart_190413

Key levels for the ASX200 index next week will be 4880 and 5000, with 4930 the key near term pivot level. Volatility is rising but remains relatively cheap, affording cheap protection for your portfolio. We have broken below the 13 and 50 day moving averages, and these now have the potential to act as resistance for the any positive move going forward.

Defensive ASX sectors have traded higher this week, with the telco and property sectors breaking to new highs, while the materials and energy sectors have been smashed, with the materials breaking below multi-year lows.

Protection is still relatively cheap and investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (sovereign debt), China (stimulus) and the US (corporate earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Markets Consolidate On Eurozone Debt Contagion Concerns: Weekly Market Wrap

Friday, March 22nd, 2013

Stock markets have drifted lower this week, but the US markets remain near all-time highs. In Europe the markets have suffered from the resurfacing of concerns over contagion of the eurozone debt crisis, as the terms for a bailout were rejected by the Cyprus parliament.

In today’s Analyst’s Eye we show how you can use copper price as a leading indicator for the near to medium term performance for equities.

The US markets continued higher this week, with the Dow Jones hitting a new all-time high and the S&P200 within 7 points of its all-time high. US data continues to improve, while volatility edged higher from its lowest levels in six years. The three benchmark indexes held on to recent gains this week, with the Dow Jones up 10% for the year.

In Europe stock markets fell, as the eurozone “troika” got tough with Cyprus. The European Central Bank (ECB) said it may cut Cypriot banks off from emergency funds after 25 March as the Cyprus parliament struggled to agree on a plan to stave off financial collapse.

Trader sentiment in Europe was weighed down by disappointing manufacturing data. A measure of eurozone services and manufacturing output contracted more than forecast, as a composite index based on a survey of purchasing managers in both industries fell to 46.5 (down from 47.9 in February). In the UK the FTSE recorded its longest losing streak in 10 months, while German stocks declined for a fourth session in five, retracing from 5-year highs after a contraction in eurozone manufacturing indicating an ongoing recession in the region.

Asian stock markets have generally pulled back this week, but Japan continued higher. The bears continue to make their presence known in the resources sector and we saw some profit-taking in the Financials as well. The Chinese market found support as Chinese manufacturing expanded this month, after the preliminary Purchasing Managers Index from HSBC Holdings Plc and Markit Economics showed factory activity accelerating in China, up 51.7 for March. In Hong Kong the Hang Seng Index has fallen -2.8 percent this year, making it the worst performing index outside of Italy. In Japan investors have backed the new BoJ central bank governor to announce fresh stimulus. The Nikkei is the best performing developed market benchmark index this year, up 44% since its November lows as the yen weakened.

The Aussie market has exhibited some volatility again this week and has continued to back off 4½ year highs. The ASX is closing lower for the week, after having a consistent string of gains for fourteen of the past eighteen weeks, with the All Ords hovering around the 5000 level. The ASX market is testing the 50-day moving average for support near-term, as this has not been broken since the up-move began last November.

The ASX200 has tested the 4930 level near-term and has bounced today. You may get another chance to put your protection in place if you have not already done so. The main driver has been the news out of the eurozone about possible contagion if the Cyprus bailout initiative falls apart.

ASX XJO

Key levels for the ASX200 index next week will be 4930 and 5080, with 5030 the key short term pivot level. Volatility is picking up, but is still relatively cheap and affords cheap protection for your portfolio. We are attempting to find support around the 50 day moving average closing, as traders are starting nibble away at stocks that have been sold off this week. All sectors have traded weaker, with the materials sectors again being the major drag on the market this week down -3.8%, while the energy sector was down -3%.

Remain attuned to the news from overseas, particularly from the eurozone (Cyprus), China (stimulus) and the US (sequestration). Monitor the US dollar for a guide to the future direction of commodities and equities prices. In today’s Analyst Eye we discuss inter-market analysis.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser,
D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Markets Grind Higher On Improving US Data: Weekly Market Wrap

Friday, March 15th, 2013

Stock markets ground ever higher this week, with the US markets at all-time highs and the German markets also within sight of their all-time highs, as central bank stimulus will continue into the foreseeable future.

Protection is still cheap and this is supporting the up-move. The bears continue to make their presence known in the resources sector and sold down the Chinese market again this week, which is now down -7% from its recent high.

Markets remain at multi-year highs, with many markets holding the break outs from their recent trading ranges. Market volatility is contracting, as investors are holding their protection in place to hedge their recent gains. The Australian market is looking to close down for the week, dragged down by the materials sector.

In today’s Analyst’s Eye we explain how you can identify where the big money is positioned in the market, using a simple system in “Show Me The Money“.

In the US, markets continued higher this week with the Dow Jones up for a tenth session, marking its longest winning streak since November 1996 and making new all-time highs again. The S&P500 index is within 2 points of its record highs, while the volatility edged towards its lowest levels in six years. The three benchmark indexes held on to recent gains this week, with the Dow Jones up 10% for the year. Trader sentiment has been boosted by weekly jobs data continuing to improve, as first-time jobless claims fell by 10,000 to 332,000, the least since mid-January and the four-week average has now declined to a five-year low. Earlier, retail sales enjoyed their largest increase in five months, as the Commerce Department figures showed a 1.1 percent advance in retail sales in February, more than double the forecasts (up from 0.2 percent in January).

European stock markets have held on to their recent breakouts and are trading at new 4 1/2 year highs. Traders are looking for positive outcomes from the region’s two-day leaders summit in Brussels, where eurozone finance ministers meet to discuss a bailout for Cyprus and policy makers may even loosen austerity measures, as the recession and mounting unemployment in southern Europe outweighs the eurozone debt crisis issues in the near-term. In the UK the FTSE advanced, extending its highest level in over five years, led by the retailers. In Germany the market broke above the 8,050 level and is approaching all-time highs.

Asian stock markets have generally consolidated this week, but Japan continued higher. The MSCI Asia Pacific Index is up 4% for the year and is still holding around levels not seen since August 2011. The regional benchmark index has hit a 19-month high this week. The Chinese and Hong Kong markets found some support, after their recent sell-off due to comments from the Chinese central bank chief, who said the bank is on “high alert” for inflation. Recent data showed inflation accelerated in February, while industrial output had its weakest start to a year since 2009 and lending and retail sales growth slowed.

Chinese developers and miners weighed on the markets as the People’s Bank Governor said monetary policy is “no longer relaxed”. The markets have struggled since the government moved to cool off the property sector and this week the Shenzhen land authorities will not approve the sale of new property projects with higher prices. The Shanghai Composite Index has lost 7 percent since its February high, due to concerns that the government will tighten monetary policy at the same time as economic expansion slows.

In Japan the Nikkei 225 Stock Average is the best performing developed market benchmark index this year, advancing after the lower house endorsed Prime Minister Abe’s nominees for the Bank of Japan’s leadership, who are expected to support a pro-stimulus policy for central bank. The Japanese the market is up 43% since its November lows.

The Aussie market has exhibited some volatility again this week, but is still trading around 4 ½ year highs. The ASX is looking to close down for the week, after having a consistent string of gains for fourteen of the past seventeen weeks, with the All Ords hovering around the 5100 level. The ASX market is testing the 20 day moving average, which has not been broken since the up-move began last November.

The ASX200 has tested the 5030 level near-term and has bounced again today. It is time to get your protection in place if you have not already done so.

The main domestic news this week has been the employment report which showed signs the economy was gathering pace with 71,500 jobs added over February, however drilling down we see that part-time employment jumped a sharp 54,000, while full-time employment only rose 18,000 in February. The market was weaker on the news, as economists were prompted to push out their dates for the next RBA rate rise.

XJO

Key levels for the ASX200 index next week will again be 5000 and 5180, with 5080 the key short term pivot level. Volatility is picking up, but is still relatively cheap and affords cheap protection for your portfolio. We are closing down from a new weekly high, as traders are starting to be a little more cautious given the spectacular run in stocks this year. The materials sector has been the major drag on the market this week, down -2.5%, but we are also seeing profit-taking in the banks and the defensive sectors, with the banking index having its first down week since November.

Remain attuned to the news from overseas, particularly from the eurozone (Brussels summit), China (stimulus) and the US. Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Protection is still relatively cheap and investors can have cheap insurance for their portfolio and could look to put their money to work while reducing their risk by using options and warrants strategies.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser, D2MX

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Traders Cheer On The Bernanke Put: Weekly Market Wrap

Friday, March 1st, 2013

Central banks across the globe have reaffirmed their commitment to their historic monetary easing policies. Last week we said “the bulls still appear to have the upper hand in the equities markets” and it seems the bulls have won their battle with the bears in the first two months of 2013, as markets globally continue with their best start to the year in decades.

The bears have made their presence known though, with volatility on the rise over the past fortnight, as the CBOE VIX volatility index in the US had its biggest single session spike since August 2011. Protection is still cheap and it is time to protect your portfolio, if you have not already done so.

Markets remain at multi-year highs and in Asian trading volumes have improved. Market volatility is rising, as investors are becoming nervous over the strength of the markets since the start of the year. The Australian market rebounded from its biggest fall since last November and is trading at 53-month highs. The commodity markets remain under pressure, which is in turn dampening the prospects of our mining sector.

In today’s Analyst’s Eye, Investors – The Results Are In!, we highlight some of the key results from the reporting season which is coming to a close.

US stock markets remain at 5-year highs, after the Federal Reserve Chairman reaffirmed the Fed’s commitment to QE3++ and the “Bernanke Put” is firmly in play . For the month the S&P500 rose 1.1%, up for a fourth straight month. Buyers have pushed stocks within striking distance of all-time highs this week. The S&P500 is still up 6.2% this year and is within 3% from all-time highs and the Dow Jones is around 1% from all-time highs.

The reporting season is nearing an end, as for the S&P 500 companies that have released quarterly results 3 in 4 companies have beat profit estimates, according to Bloomberg data. Trader sentiment was boosted as the Commerce Department revised its GDP figures to show growth at a 0.1 percent annual rate, up from a previously estimated 0.1 percent drop. Also business activity in the US expanded unexpectedly in February at the fastest pace in almost a year.

US housing improved more than forecast in January, signaling that the housing sector remains strong, while US orders for durable goods climbed in January by the most in a year, proving business investment is holding up. Investors are facing the looming “sequestration” due to start tomorrow, where federal spending will be reduced by $US85 billion in the final seven months of this fiscal year and by $US1.2 trillion over the next nine years.

European stock markets finished the month higher, as the ECB reaffirmed its commitment to monetary easing. The Europe Stoxx 600 ended up 1% for the month, recording a ninth month of straight gains, its longest winning streak since 1997. ECB President Draghi has signaled the central bank has no intention of tightening monetary policy near-term, as inflation is projected to remain well below its 2 percent target next year. The ECB President said the ECB is comfortable that the balance sheet may shrink naturally as confidence returns to financial markets and banks repay emergency loans, while elsewhere it appears that Italy is headed for a broad coalition government. The European Commission data confirmed economic confidence in the eurozone increased to 91.1 more than economists forecast in February (up from 89.5). This confidence data pushed the German stock market higher, after previously falling the most in three weeks.

Asian stock markets rebounded strongly yesterday, with the regional benchmark index recording its biggest jump in over five months, after US and Japanese economic data boosted confidence in the global recovery and as the Japanese Prime Minister nominated a new central bank governor. The MSCI Asia Pacific Index is trading around its highest closing level since August 2011 as buyers stepped in on the back of the Bernanke Put confirmation. Of the almost 400 companies on the MSCI Asia Pacific index that have reported earnings so far this quarter, about half have exceeded profit expectations, while half missed sales projections, according to Bloomberg surveys (compares with 75% of S&P500 beating on profits).

The Chinese stock market rebounded for its biggest jump in a month, led by the industrial and property sectors, as some high profile Asian companies traded higher after releasing better-than-expected earnings reports, with the Shanghai Composite still up 4.4 percent for the year, but has fallen 2.7 percent after rebounding nearly 24 percent from its lows in December. In Japan the market jumped up for a seventh month, its longest winning streak since January 2006, as a report showed Japanese industrial production rose for a second month in January and the Japanese market is still around highs not seen since September 2008, as traders had pushed shares on speculation that the new BoJ Governor will be more accommodative. Chinese PMI data is due out today.

The Aussie market has exhibited some volatility again this week, but is now trading near 53-month highs. The ASX is continuing its consistent string of gains up for the thirteen of the past fifteen weeks, with the All Ords hovering around the 5100 level. The ASX200 market has tested the 5100 level near-term and appears to be consolidating above the 4980 level near-term, as traders are exhibiting some indecision near-term. It has been a busy week for corporate reporting and we discuss this fully in today’s Analyst’s Eye.

Key levels for the ASX200 index next week will be 4980 and 5130, with 5000 the key short term pivot level. Volatility is picking up, but is still relatively cheap and affords cheap protection for your portfolio. Traders are starting to be more cautious given the spectacular run in stocks this year.

Investors can have cheap insurance for their portfolio and could look to put their money to work while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (earnings), China (PMI) and the US (sequestration). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Markets Higher As “Buy on Dips” Rules, But Volatility is Increasing: Weekly Market Wrap

Friday, February 8th, 2013

Traders globally have continued to push markets higher, although market volatility is rising as investors are becoming a little nervous over the strength of the markets since the start of the year, with the January performance the best in over a decade. Investors are turning their focus from the US earnings season across to Europe, where concerns are resurfacing about the debt crisis and the earnings season is well underway.

In today’s Analyst’s Eye we discuss the Yield Investment Strategy, identifying some potential investments and how you can protect your recent gains while still qualifying for future dividends.

The Australian market has continued its relentless rise (up consistently since last November) and is in bull market territory, up over 23% from its June lows and up over 14% from its November lows. There was a hiccup earlier in the week, but we are moving to new highs on the close.

US stock markets have held on to recent gains this week, hovering around all-time highs after recording their best January since 1994. The next target on the upside for the S&P 500 is still 1525 in the near-term. The S&P 500 is up 5.8% this year and is only 3.6% from all-time highs, while the Dow Jones is just 1.5% from all-time highs, hovering around the key 14,000 level. The CBOE Volatility index is up 4.7% for the week so far, indicating nervousness among investors after the recent spectacular run. Trader sentiment has been tempered by concerns over the eurozone debt crisis, after comments from the ECB president regarding the strength of the euro dollar which has a dampening impact European growth. Domestically weekly employment figures disappointed and a separate report showed productivity, the measure of employee output per hour, decreased at a 2 percent annual rate (down from 3.2 percent in the precious quarter), its worst performance in nearly two years. Over 300 S&P500 companies have reported, and of these 3 in 4 have exceeded earnings expectations, while 66% have beat on sales, with average earnings up 5% (compared to 1% in the previous quarter), according to Bloomberg surveys.

European stock markets paint a different picture and are down off their highs for the week, capping their biggest monthly gain since last July. These markets are still near their highest level in almost two years, as European companies began reporting earnings. The Europe Stoxx 600 is still at levels not seen since February 2011, but the index has retraced and is now only up 1.5% for the year, after recording its longest winning streak since 1997. The three benchmark indexes are all down for the week, with France, Italy and Spain leading the falls, as sellers stepped in after Spain lifted its ban on short-selling stocks. The Stoxx Index, a measure of the price of using options to protect against declines in the Index, edged higher again, after it surged 26 percent earlier in the week for its biggest jump since August 2011. Of the nearly 200 Europe Stoxx 600 companies that have reported just about half have exceeded earnings expectations, while 53% have beat on sales, according to Bloomberg surveys. The European Central Bank President Mario Draghi signaled policy makers are concerned about the euro dollar strength as it could dampen inflation and detract from the eurozone economic recovery.

Asian stock markets fell back from their highest levels in eighteen months with Japan leading the way, backing off 4-year highs. The MSCI Asia Pacific Index eased -0.3%. The move is on the back of resurfacing concerns over the eurozone debt crisis. The index is still up around 11% from its June lows, led by Japanese stocks on optimism that the new government will take the necessary steps to fight deflation. Of the 255 companies on the MSCI Asia Pacific index that have reported earnings so far this quarter, about half have exceeded profit expectations, while half missed sales projections, according to Bloomberg surveys. In Japan the market made its highest close since September 2008 this week, while in Hong Kong the market had its largest fall since November earlier this week, where the selling was due to renewed concern about the eurozone debt crisis.

The Chinese market has fallen for the first time in nine sessions, after it recorded its longest winning streak since last February and is up 24% from its 4-year lows in December. The gains this week were led by the technology and financial sectors which have lagged YTD, but the energy sector failed to participate, after China said its demand for coal is peaking. Earlier in the week this market formed a golden cross, where the 50-day is above the 200-day moving average, confirming the bullish move since late last year. According to Bloomberg, on the past five occasions in the past two decades that a golden cross has occurred, the market has jumped an average of 6.3% in the following month. Of note Tom DeMark, who made his name as the creator of indicators that show market turning points, said the Chinese market will retreat around 8 percent before resuming its up-move, as a surge in Chinese stocks has exhausted buyers.

The Aussie market is finishing the week higher and has now risen eleven of the past twelve weeks. The market is testing the 4965 level near-term. The market held above the 4870 level and is now hovering above the 4950 level and looks set to test levels not seen since mid-2008. Our market continues to rebound strongly from the November lows, on the back positive sentiment around the globe. The Aussie banks have continued higher in the chase for yield, but we have also seen money pour into industrial and resource stocks, as investors look for a turnaround in these sectors for 2013. We are moving into the local reporting season with Newcorp, Telstra and NAB reporting yesterday and Newcrest Mining reporting today. Retail sales figures disappointed, both in December (down -0.2%) and in the December quarter (up a miniscule 0.1%). The RBA said inflation remains benign at 2.25%, employment is expected to ease, the mining investment cycle is topping out and there are concerns where the economic growth will come from in the near-term. The unemployment figures came in slightly better-than-expected at 5.4%.

Key levels for the index next week will be 4880 and 5000, with 4930 the key short term pivot level. Volatility remains subdued and affords cheap protection as the markets are moving higher. Traders continue to be optimistic ahead of the Aussie reporting season, on the back of positive news flow regarding the state of the Chinese, US and European economies.

Protection is still cheap and investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (earnings), China and the US (earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact D2MX Advisory on 1300 610 024 and we can help you trade using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Markets Cap Best January Performance for Over a Decade: Weekly Market Wrap

Friday, February 1st, 2013

Traders globally have continued to push markets higher, as they capped the best January performance in over a decade. In today’s Analyst’s Eye we discuss the Covered Call Collar investment strategy, where you protect your recent gains, while still participating in future gains.

The Australian market has capped its longest winning streak since 2003 (up ten straight days) and is in bull market territory: up over 23% from its June lows, and up over 13% from its November lows. The ASX was up 5.1% in January, which bodes well for the rest of the year. “As goes January so goes the year”, as they say, and this has been borne out in the past 40 years when the ASX was up 1.8% or more in January the index continued higher on average by around 7% for the year.

US stock markets eased overnight, backing off their near all-time highs and recording their best January since 1994. The next target on the upside for the S&P 500 is still 1525 in the near-term. It is worth remembering that this time last year the US markets rose 4% and then followed it up by a 4% rise in February. The S&P 500 index was up 5.1% this January, it has now more than doubled from its 2009 lows and is only 4% below its all-time highs.

US trade sentiment has been tempered by disappointing earnings, caution over the FOMC meeting outcome, plus there are the monthly unemployment figures due out tonight. The FOMC agreed to keep rates unchanged and continued its $US1.14 trillion bond buying program in the face of a mixed picture of economic growth. Of the S&P 500 companies that have reported, 3 in 4 have exceeded expectations, according to Bloomberg surveys. This week’s GDP report showed economic activity contracted by 0.1% in the final quarter of 2012, which could have been expected given hurricane Sandy, the elections and the “fiscal cliff”. Government defence spending was cut the most since the 1970s. The monthly employment report, due out tonight, will be keenly watched.

European stock markets have eased back from key levels, ending their biggest monthly gain since last July. These markets are still near their highest level in almost two years, as European companies began reporting earnings. The Stoxx 600 dropped another -0.5% for the session, but it’s still at levels not seen since February 2011. The index is up 2.7% for the year and has recorded its longest winning streak since 1997. The three benchmark indexes fell by around -0.6% overnight, but still remain near their recent highs up and are up over 10% from their November lows. The UK market is backing off its highest level since May 2008, while in Germany the market has eased, but the DAX index was up 2.5% in January. Elsewhere Spain has lifted its ban on short-selling stocks as the benchmark IBEX 35 Index has rallied strongly and the Spanish banks have taken steps to repair their balance sheets.

Asian stock markets have had another good week, with the regional benchmark index recording a third consecutive month of gains. The MSCI Asia Pacific Index was up 3.1% in January, on the back of news that showed the Chinese economy is recovering. This index is up nearly 11% from its June lows, led by Japanese stocks on optimism that the new government will take the necessary steps to fight deflation. In Japan the market eased back from its 33-month high, after capping its longest monthly winning streak since August 2009. Japan’s central bank committed to an aggressive asset buying program to start next January, when it will buy about YEN13 trillion ($US145 billion) in Japanese government bonds and treasuries per month.

Chinese shares rose for a second month, up 5.1 percent in January, the best performance among the biggest emerging markets. Chinese traders are ringing the bell as China’s Shanghai Composite exited its longest ever bear market yesterday, marked by a 756-day period without a 20 percent gain. This is its longest on record, according to Bloomberg, and the gauge fell 38 percent during the period. The market is now at its highest level in eight months and is up over 20% from its 4-year low of last year, entering a bull market after government data showed the economy expanded in the last four months of 2012, ending a seven-quarter slowdown. The Hong Kong market eased back from 21-month highs.

The Aussie market is finishing the week higher and has now risen ten of the past eleven weeks. The market is testing the 4900 level near-term. The market has held above the 4850 level, is now hovering above 4900 and looks set to test levels not seen since 2008. Our market continues to rebound strongly since the November lows, on the back positive sentiment around the globe and the Aussie banks continuing higher in the chase for yield, but we have also seen money pour into industrial and resource stocks, as investors look for a turnaround in these sectors for 2013. We are moving into the Aussie reporting season later this month.

Key levels for the index next week will be 4840 and 4940, with 4900 the key short term pivot level. Volatility remains subdued and affords cheap protection as the markets are moving higher. Traders continue to be optimistic, on the back of positive news flow regarding the state of the Chinese, US and European economies.

Remain attuned to the news from overseas, particularly from the eurozone (earnings), China and the US (jobs and earnings). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Investors can have cheap insurance for their portfolio and could look to put their money to work, while reducing their risk by using options and warrants strategies. Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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Weekly Market Wrap: The Christmas Rally Continues

Friday, December 21st, 2012

The Christmas rally continues for most markets around the world. Most of the European and Asian bourses are testing year highs and the US markets have pushed near October highs. In the past markets have had a seasonal tendency to trade higher into the holiday period and this year seems to be an exceptional example. The only seemingly negative sentiment to be found surrounds the US “fiscal cliff” as markets wait for the US government’s plan of attack on this problem.

The US markets have had a strong week with the major indices posting gains in three sessions out of four so far this week. This bodes well for a push higher into year’s end. The S&P 500 is now up 14 percent for the year. Since the 1980s the US markets have averaged a gain of 1.5% for December, and they are now up 1.5% for the month so far. US investors have been positioning for a resolution of the “fiscal cliff” before Christmas so expect markets to be especially news-driven until the issues are finally resolved, and this could take as late as January next year.

European stock markets are continuing on their amazing run, and most have hit fresh 18-month highs overnight as investors push money into the markets. The Stoxx 600 is at its highest level since May 2011 and has rallied 15 percent for the year, as optimism grows that the US Congress and President Barack Obama would resolve the impasse over the US budget and as the European Central Bank remains committed to an “unlimited” bond-buying plan. In a further step towards financial unification of the Eurozone countries, the European financial leaders agreed to put the ECB in charge of all large Eurozone lenders, rather than their national regulators. Some 200 banks will qualify for oversight by the ECB. The German market is trading at its highest level in nearly five years, and this market is now up 28 percent from its June lows. In the UK the FTSE remains around 8-month highs.

Asian stock markets have been on the rise again this week, with the regional benchmark index making fresh highs. The Chinese market has traded positively which is encouraging after its large move last week. Investors reacted positively to the news from the US Federal Reserve and the Chinese data that confirmed the economy is bottoming. The MSCI Asia Pacific Index has advanced for the past four weeks, recording its longest winning streak in three years, on the back of signs of economic growth improving in the world’s largest economies. The index is up 12% for the year, following announcements from central banks globally of added stimulus designed to spur growth and data that is indicating that the Chinese slowdown may be bottoming. The Chinese market is up 4.8% for December and is still trading around 1-month highs, but the leadership still needs to stimulate the domestic economy in order to push GDP growth back above 8%. In Japan the market rose again above 7-month highs, with exporters advancing as the yen touched a 9-month low. Polls show that the Liberal Democratic Party looks likely to gain a majority in the upcoming election. Machinery orders have risen for the first time in three months.

In commodities generally industrial metals continue higher while the precious metals have had a large fall. Iron ore is up 45% from its September lows, copper is up nearly 9% in a month, aluminium is up 13% since October lows. Gold has fallen from $1700 to $1645 this week, a fall of 3%. Silver has also fallen, going from $32.50 to $29.90, a drop of 8%. Crude oil has posted gains of over 3% this week with WTI rising from $87 to $90 a barrel.

The Australian market has pushed higher and is trading around the 4650 level this week. Our two largest miners have been the major catalyst in helping the XJO push higher with BHP posting gains of nearly 3% for the week and RIO over 4%. Today the banks have added to the gains with some even breaking past recent resistance. Generally our market has rebounded on the back of positive sentiment around the globe. Be aware that we may see a short-term top in the market in the next couple of weeks, so be ready to protect your position and/or take profits.

Jonathan Tacadena
Trading Desk Manager, D2MX

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Markets Rebound On Optimism Over Debt Talks And Improving Manufacturing Figures: Weekly Market Wrap

Friday, November 23rd, 2012

Markets have bounced this week and look to be setting up to move higher near-term, to test the 50 percent retracements of their falls from the October peaks. The US markets recovered from trading below their critical 200-day average for the first time since June. The Chinese market is again back at 3-year lows, as traders are hanging out for central bank stimulus measures after the completion of their leadership summit. In Europe investors are giving leaders the benefit of the doubt regarding the delayed debt bailout negotiations, with discussions over the Greek bailout delayed until next week.

US stock markets have bounced off key levels this week. Markets were closed on Thursday for Thanksgiving and there will be a shortened trading session on Friday. The last day of the week is referred to as “Black Friday”, as it is typically when the Christmas shopping season begins and the market tends to trade higher into the end of the year. All three benchmark indexes have been on the rise and the S&P 500 is up 2.6% over the past 3 sessions. Investor sentiment was supported by news that Israel and the Palestinian militant group Hamas agreed to a cease fire, while fewer Americans filed applications for unemployment benefits last week in the wake of superstorm Sandy.

Traders recovered from the nervousness created after comments from Federal Reserve Chairman Ben Bernanke that the central bank does not have the tools to offset the potential harm to the economy from the “fiscal cliff”. The comments suggested that Congress should not be looking at simply kicking the can down the road in its resolution of the “fiscal cliff” discussions – note the $US607 billion of automatic tax increases and spending cuts that could force the US into a recession next year, if they went ahead. In other economic news US housing starts surprised in October, unexpectedly climbing 3.6 percent in October to a 4-year high.

European stock markets have risen in the past four sessions, recording their longest winning streak in five weeks, after preliminary Chinese PMI figures showed Chinese manufacturing expanded for the first time in 13 months. The Stoxx Europe 600 Index is on the rise and is at a 2-week high, having bounced from its lowest level since early August. This index has now rallied 16 percent from its June lows, following the European Central Bank announcement of an “unlimited” bond-buying plan and the Federal Reserve began a third round of asset purchases (QE3++). Trading volumes picked up to be 15 percent above the monthly average while volatility is at multi-year lows (December 2007).

In economic news eurozone factory output contracted less than economists estimated, as the Markit report showed that manufacturing climbed to 46.2 this month (up from 45.4 in October), while manufacturing PMIs for Germany and France came in ahead of expectations for the two biggest economies in the eurozone. The decision over the Greek debt bailout has been delayed until next week, as European leaders praised the Greek government’s economic overhaul and declared talks will resume next week (26 November). The creditors, led by Germany, refused to front up fresh money or offer debt relief; the finance leaders were unable to gather enough funds from other sources to help alleviate the Greek debt situation, which is set to hit 190 percent of gross domestic product (GDP) in 2014.

In the UK the FTSE 100 has recorded its longest winning streak in five weeks, as the miners led the gains on the back Chinese preliminary PMI manufacturing figures indicating expansion. In Spain the 10-year government bonds rose for a third session, as the borrowing costs declined when its bond sales for debt due in 2015, 2017 and 2021, exceeded its maximum target.

Asian stock markets have risen this week and the regional benchmark index is on track for its highest weekly close in 2 weeks. The MSCI Asia Pacific Index rose another 0.9% overnight and is on track for its biggest advance since mid-October, as gainers outnumbered losers by about two to one. A surge in Japanese shares, Chinese preliminary manufacturing figures and US jobs and house stats added to signs the world’s two largest economies are on the improve. The index is up 12% from its lows in June, following announcements from central banks globally of added stimulus designed to spur growth and data that is indicating that the Chinese slowdown may be bottoming. Of the 565 companies on the MSCI Asia Pacific Index that have reported their quarterly results, 55 percent fell short of expectations, according to Bloomberg data. In China the Shanghai Composite Index continues to underperform and is again testing the key psychological level of 2,000, after recording its biggest gain in 3 weeks earlier in the week. The preliminary Chinese PMI figures are indicating that growth in the world’s second-largest economy is rebounding, after slowing for the past seven quarters.

Commodities have held their ground this week, with crude-oil edging higher off 3-month lows due to the conflict in Israel, while copper is trying for support after experiencing its longest slump in 8 weeks, all on concerns over global growth. Gold is finding resistance around the $US1,750 level.

The Australian market has bounced off the key support level around the 200-day average, having broken down from its uptrending channel last week, as our reporting season continues to reveal disappointments. The market is hovering around the 4400 level and looks set to move higher near-term, to test the 50% retracement level its fall from mid-October. Our market has rebounded on the back of short-covering and tentative buying pressure around the globe, and the Aussie banks have rebounded off short-term support, in the chase for yield, as the RBA talks of further interest rate cuts near-term. Telstra has hit key levels not seen since mid-2008.

Protection is still relatively cheap at the moment and investors should have protection in place for their capital, and could look to put their money to work, while reducing their risk by using options and warrants strategies. Remain attuned to the news from overseas, particularly from the eurozone (Greek debt), Israel, China (leadership) and the US (fiscal cliff). Monitor the performance of Italian and Spanish borrowing costs which have been easing, the China-Japan tensions and the US dollar for a guide to the future direction of commodities and equities prices.

The S&P/ASX 200 index is currently trading at 4410 having bounced off its 200-day moving average this week. Key levels for the index next week will be 4360 and 4460, with 4400 the key short term pivot level. Traders are being cautiously optimistic, into the holiday weekend in the US and on the back of the US “fiscal cliff’, as they digest the key leadership changes in the US and China, and the delays in the bailouts for the PIIGS economies in the eurozone.

Contact me at D2MX Trading on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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