*14/10/10 - 8.09am - by James Gerrish**
Stocks rose overnight with the Dow Jones hitting a new 6 month high. At its best the Dow was +130 points but some selling in the last hour of trade took some of the shine off. The main driver was news from China about a record increase in foreign exchange revenues and a 25% jump in exports. This provides further evidence that China's economy is still powering along and steps to manage growth have been conservative. This data is yet another piece of information that supports our view that emerging markets are going to drive global growth over the next 5 years.
Overnight, the DOW JONES added +75 points or +0.69% to 11,096. In London the FTSE 100 rose +85 points or +1.51% to close at 5747. Locally, SPI FUTURES are pricing in a rise of 31 points.
Looking at the chart of the Dow Jones there is obvious resistance at the top of its trading channel and the index touched this level last night.
The AUSSIE DOLLAR was in focus hitting a fresh 27 year high of US99.37c - just a whisker away from parity once again driven by a drop in the Greenback and continued support in the commodity market. The Commodity index rose +1.91% last night supported by GOLD which hit a new record high of $1370. Copper also traded higher as did the broad basket of base metals.
Its hard to argue with the current trend (Long Commodities and Growth orientated Equities) but one of the main issues we have at the moment, is the timing to top up on this theme. To me the best way to play this is have a targeted list of stocks with price levels for entry. The best advice at times is to be patient and wait for the price action of the stock to offer a solid sign for entry that is going to offer the biggest chance of upside for the smallest amount of risk. This is the concept of risk adjusted returns.
A positive day on the market expected with commodity stocks to once again outshine the banks.
By James Gerrish
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