**14/09/10 - 9.06am - by James Gerrish**
The US market traded higher again overnight which has been the trend for 8 of the last 9 trading sessions. Over the weekend we saw some better than expected trade data out of China and this went some way to appease those pessimists that were calling for a more protracted slow down in that market. This came on the back of improving employment in the US and this has led to some strong momentum towards equities.
Overnight the DOW JONES added +81 points or +0.77% to close at 10544. In London, the FTSE 100 had a strong session adding +63 points or +1.16% to close at 5565. Locally, SPI Futures are matching +14 points higher suggesting a marginally positive start to todays session.
If we look at the prospects for a sustained move in the market, its hard to get any longer term clarity past about a month. With the breakout yesterday and consolidation that’s likely to occur today, we'd be suggesting a positive move for the remainder of the month with a price target on the S&P/ASX 200 of 4800.
This move in the equity market in my view has been flagged by the strength in the Aussie Dollar. We see the Aussie being a strong leading indicator of the local equity market and we believe this correlation is set to continue. (Blue is AUD – Black is XJO)
ANZ remains our best pick in the banks at this stage followed by WBC. ANZ has broken from a longer term consolidation pattern which was triggered at $23.60. From a technical perspective this would imply a target in the stock of $26 - so some further upside in this stock a probability.
Oil Search (OSH) was another interesting stock yesterday after breaking above some medium term resistance at $6.00. The stock ran away yesterday however it would be one to watch today for some consolidation above $6. If it pulls back and consolidates that would offer a better risk entry into the position. The target on this stock would be around $6.80.
A day of consolidation on the market is expected.
