Evening Wrap: ASX soars 5.5% in two days, V-shaped bounce for tech, US futures fall

The S&P/ASX 200 closed 116 points higher, up 1.74%.

The local sharemarket is on its biggest two day winning streak since March 2020, tech is leading towards the upside, Australian services PMI ticks higher in September and a look at a few Index charts.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

The ASX 200 closed towards session high, up 5.5% in the last two sessions. More in depth insights in the Post Market Brief below.

• 10 out of 11 sectors closed higher

• Tech rallied an outsized 3.85%

• Discretionary and Financials also outperformed benchmarks

• Defensive sectors including Staples, Utilities and Real Estate underperformed

• 74% of the Top 200 advanced

Announcements

• Lithium Energy (ASX: LEL) +52% intersected highly conductive brines in a maiden drill-hole at the Solaroz Lithium Brine Project  

• Link Administration (ASX: LNK) +6.7% advises it received a non-binding, conditional and indicative takeover from Dye & Durham on 2 October for $1.1bn 

• Anson Resources (ASX: ASN) +3.2% received approval from the US Department of Interior Bureau of Land Management for a resource expansion drilling program at the Paradox Lithium Project in Utah   

• Fortescue (ASX: FMG) +2.4% is investing $199.5m for a stake in Tree Energy Solutions to jointly develop and accelerate green hydrogen hubs

• De Grey Mining (ASX: DEG) shares are halted pending the completion of a $130m capital raising at $1.00 per share, an 8.3% discount to its last close

• Allkem (ASX: AKE) -3.1% provided an update for its three-phase resource extension program for the Mt Cattlin Project in WA. Planning is underway for follow-up drilling

• Sayona Mining (ASX: SYA) -7.8% commenced a pre-feasibility study for the Moblan Lithium Project, targeting completion by May 2023

Broker updates

• Evolution (ASX: EVN) was upgraded to a Buy from Neutral by UBS with a $2.40 target price

• Flight Centre (ASX: FLT) was upgraded to Hold from Sell with a $14.26 target price

• Transurban (ASX: TCL) was upgraded to Neutral from Underperform with a $12.90 target price

Economy

• Australia services PMI was 50.6 in September from 50.4 in August

  • “Despite recent RBA interest rate decisions and current global inflationary pressures, latest survey data displayed evidence that the Australian private sector economy may be able to avoid the recessions that are likely to be seen elsewhere,” said Laura Denman, Economist at S&P Global Market Intelligence

  • “A sustained easing in inflationary pressures is also encouraging to see and indicates that the recent interest rate hikes are having some effect on pricing levels.”

Commodities 

Things were relatively quite on the commodities front with most major metal and energy prices up or down less than 1%.

• Iron ore futures rose 0.4% to US$95.4 a tonne

Latest news

Post market brief

Things have run up pretty hard in the last two days, which places cash heavy investors in a rather difficult position. After all, nobody likes to buy things that have gone vertical.

Index charts

S&P/ASX 200: Up 5.5% in the last two sessions. Closing towards session highs and above the 50-day moving average for the first time since 13 September.

It'll be interesting to see how we pull back after such a V-shaped move. The pullback is just as important as the rally. If its volatile with heavy distribution and big intraday selling like the ones we saw in late August and September, that would suggest the recent rally was not genuine and just another bear market bounce.

XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Materials: V-shaped rebound. Do we see some resistance around the trendline and 200-day moving average?

XMJ chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Tech: Another V-shaped bounce, up almost 9% in the last two sessions. Do we see this former support area turn into resistance?

XIJ chart (Source: TradingView, Annotations by Market Index)

Stock charts

I've neglected individual charts for a while. More broadly speaking, stocks are rather extended after a two day rally. There are still some interesting set ups taking place. But volatility remains high.

Altium: V-shaped rebound but holding post earnings gap up

Altium chart (Source: TradingView)

Data#3: Another tech name that's held up relatively well, bouncing off the 50-day (green)

Data#3 chart (Source: TradingView)

Scans