It should be an ugly one today on the ASX. However you might think of it as a chance to buy gold companies on a correction. The local market will follow Friday’s awful day on the Down, when the index closed down over two percent. But gold shares are in vogue.
Something to watch for on the ASX/200 is how the index responds after today’s initial wave of selling. The chart above, courtesy of Yahoo, shows the index over the last two years. The red line is the 200-day moving average and as you can see, it’s mostly up.
The weak start to the year has caused the index to lose some momentum. And stepping away from the technical analysis for a moment, you have to wonder what can help it regain the positive momentum. It’s not likely to be news from America, where the weak job market sparked Friday’s nausea.
Recession. The word is on everyone’s lips now. But it’s becoming apparent that this latest American recession won’t be like a mild head cold. It could put a serious dent in consumer demand from the world’s largest consumer. At the very least, that would be commodity price bearish (base metals) and lead to a lower Rio and BHP.