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- End of financial year selling. Traders are selling weak names to offset against any gains made through the year.
- Greek issues are in play. The IMF have a deadline ‘before the Asian session’ on Monday and nothing is certain at this stage. Some will feel it’s prudent to take some risk off the table. This view is what the media will be saying, but if I sense check this view we are not really seeing any major risk off moves in safe havens. Aussie treasuries, gold and US futures are flat, for example.
- Options expiry yesterday. This would explain the monster volume. Traders would have taken delivery of stock and perhaps these holdings were no longer wanted after being exercised. If the pace of the volume slows into the afternoon then this could make sense as many would have sold on open.
- Volume in the cash market and SPI futures is huge (nearly $4b in cash).
- The technical guys wouldn’t care whatever the reason. As you can see, the index is making a series of lower highs and lows (ie. a downtrend) and they would argue that, whatever the reason, the probability of sharp fall increases if the index is in a downtrend.
- Some have said the fact Chinese markets fell 3.5% into the close yesterday has seen us playing catch up. This is nonsense, as the ASX 200 actually has a negative 20-day correlation with the CSI 300.