Thursday, March 29, 2012

Morning Market Analysis

Today I want to focus on the Asian and Australian market to show how "China-centric" these regions equity markets have become.  Over the last month or so, there has been increased talk and analysis to the effect that China is slowing down.  And while the US market is rallying, Asian markets are focusing on China's decreased activity, thereby keeping them lower, or at least preventing them from participating in the US market's rally.

The China ETF hit a high in the 40.5/40.75 area in early February.  After that it moved sideways for a month and is now drifting lower.  Notice that prices are now trading between the 50% and 38.2% Fib level and are in a "lower low and lower high" pattern.  The shorter EMAs (10 and 20) have crossed below the 50, the CMF has dropped and momentum is decreasing.

The Australian ETF has hit the 24 area twice since early February, but is now drifting lower.  However, prices have found support at the 200 day EMA and the shorter EMAs are less bearish.  Plus, the volume and momentum indicators are now slightly bullish -- although prices still have the previous resistance around 24 to get through.

The Hong Kong market hit resistance around the 18.5 handle and is now also drifting lower.  But this chart is more like the Australian chart, which means it is hardly in a "super bearish" stance.  Prices are moving more sideways than down.  The shorter EMAs are tangled, but are still above the 50.  The volume indicators are slightly bullish, but momentum is still decreasing.

The Japanese ETF is forming a loosely configured triangle consolidation pattern.  There is resistance at the 10.2/10.3 level, but we also have a rising trend line supporting prices.  The shorter EMAs are still in a bullish configuration, while the volume indicators are bullish.  Although the MACD is decreasing, it is about to give a buy signal. 

The South Korean market is drifting higher.  There is some solid resistance at the 61 area.  The shorter EMAs are still moving higher, but barely so.  However, the volume indicators are still bullish, although momentum is still weak.

Some of these charts (South Korean and Japan) could be viewed as consolidating after gains, with the others (Hong Kong and Australia) simply moving sideways/slightly higher.  But that has to be seen against the backdrop of the Chinese market, which is clearly moving lower.  There is also the issue of a clearly weakening yen and the possible negative effects that might have on the region. In short, this part of the trading world is not caught up in the US market's latest move higher, which should concern US traders.