Comments - 29/10/09

Yesterday's sell signal played out today. The general market picture is very weak. Medium term weakness is expected - but expect a bounce tomorrow.

Here are the 50-Leader stats:

Yesterday:

Above 10-Day SMA - 10%
Above 50-Day SMA - 38%
Above 50-Day SMA - 92%

Today:

Above 10-Day SMA - 16%
Above 50-Day SMA - 24%
Above 50-Day SMA - 88%

I'm including yesterday's figures because we have a non-confirmation on the 10-Day SMA line. That is, the figures today are stronger than yesterday.

That suggests that internal strength may not be as weak as the index absolute figures show. Expect a bounce tomorrow.


Stocks from the 50 Leaders making new 20-Day Lows - 24

Stocks from the 50 Leaders making new 20-Day Highs - 2.
(Both were defensive stocks: Sonic Health and Telstra)

The 20-Day New Lows is extraordinarily low - almost half the index.

Expect a bounce tomorrow.

STW -Triple Bollinger Band System

Trading Strategy - Medium Term - Long Only
STW - Tracking Stock for XJO

The above chart is for the XAO - 50 Day SMA and triple bollinger bands above and below the mid-line.

Go Long STW when both conditions are met:

1. stock price crosses above One STD Line (1st Bolly Band) above the mid-line.

2. And MACD is positive.

Sell out: when stock price crosses below the One STD Line.

KISS - Keep it Simple Sam.

50 Leaders - Wrap up, 28/10/09

Here are the 50-Leader stats:

Above 10-Day SMA - 10%
Above 50-Day SMA - 38%
Above 50-Day SMA - 92%

Stocks from the 50 Leaders making new 20-Day Lows - 13

Stocks from the 50 Leaders making new 20-Day Highs - 2.
(Yep - Telstra was one of them - the other was Wesfarmers. Both Defensive Stocks.)

Those numbers are probably low enough for a bounce to occur.

For how long is another question.

The banks were pummelled today and the candle stick charts for today look like big black bombs. That probably means a pull-up tomorrow - but the technical damage looks to have been done. This looks like Wave A of an ABC pullback for the banks.

I didn't quantify it as I went through - but subjectively I noticed a lot of completed double tops. And that also probably means a test of the valley between the tops. So a move up is on the cards. If the test of the valley results in respect - then we can look at another few days or a couple of weeks (or three or four or more) of downward movement. But I'll just go with the flow.

The number of new lows also suggests a bounce. The Turtle Traders would be going short those stocks. But only about 30% of those play out (Linda Bradford Raschke, "Street Smarts").

So the courageous should be piling in - probably at the end of today.

I think I'll go to the park and play slippery-slides with my grand-daughter for a couple of days and then see how it goes.

Quick Comment - Tues 27/10/09

Today's action was probably enough to force the market into an oversold condition.

50 Leaders above the 10 Day SMA = 10%
50 Leaders above the 50 Day SMA = 56%
50 Leaders above the 150 Day SMA = 92%

50 Leaders making new 20 Day Highs = Zero
50 Leaders making new 20 Day Lows = Ten

I'm expecting a move up for a few days to work off this oversold condition. What happens then will be crunch time.

Quick Wrap. 26/10/09

The market was down today, 0.6%.

The 50 Leaders below the 10=day Moving Average was 36%. That's getting close to working off the overbought level.

But here's the cruncher.

In the 50 Leaders: New Highs - Three. New Lows - Zero.

This pullback doesn't look too serious at this stage.

Wrap up - week ending 23/10/0/9

Market Summary

The general market (XAO) was in consolidation this week, range bound although it eked out a marginal move up of +0.35%. That’s the third week in a row the XAO has been in positive territory. Note – those figures are based on a Friday weekly close. The market this week was continuously below the bull rally high set, intra-day, on Thursday, 15 October at 4897.5. So on that basis the market was down marginally this week.

The XAO is above a rising 13-Day Exponential Moving Average. Seven out of ten SP Industry Sectors were up. For a change, Telecommunications was up. The best performer was Consumer Staples after Wesfarmers had a stellar run.

Best Three Sectors:
Consumer Staples: +2.61%
Telecommunications: +2.06%
Materials: +1.66%

Worst Three:
Financials: -0.37%
Energy: -1.63%
Information Technology: -3.47%

Risk Aversion is clear with two defensive sectors at the top of the list and Financials, previously the market leader, coming in the lowest band.

Among the sub-sectors: Property Trusts down, -0.99%; Metals and Mining, +1.91%; 50 Leaders, +0.52%; and Small Ordinaries, +0.65%. The 50 Leaders was marginally better than both the XAO but fell just behind the Small Ordinaries. Risk Aversion/Risk Inclination was evenly balanced according to these measures. Gold Miners relatively flat at +0.35%.

Volume

Volume rose above the average on Thursday and Friday with Friday being well above the 2Billion shares traded. The significance of that is still to be determined. Whether that increase in volume was renewed buying leading to further rises, or selling by strong hands into weak hands ahead of further falls, is a moot question. Judging by the falls on the American market on Friday night accompanied by rising volume, the latter option looks like the best bet. We shall see. But that hasn’t changed the technical picture to any great degree. Volumes on the Australian market were good until a few weeks ago. Recently, however, volumes have not been supportive of the recent rise in the Australian markets. But our market rose anyway. Rising markets with falling volumes are usually weak markets leading to a move down. But the American market has continued upwards for months on falling volumes. This is the conundrum of the present situation

Dr Alexander Elder has developed a more sophisticated use of the volume/price relationship. The Force Index relates the change in price to the change in volume by multiplying the change in price by the change in volume and plotting the result as a histogram. I’ve developed my own version of this, by plotting an 8-Day and 21-Day Moving Average of the histogram independently of the histogram. In interpreting this chart, the most important line is the 21-Day MA (shown in Red on the chart). When it is above Zero, the bulls are in charge, when below Zero, the market is bearish. Other factors are divergences and break of trend line when the trend has been in place for some considerable length of time. (The 8-Day Line has other uses, which I won’t go into at this time.)

See above for the 8/21 Sentiment Index.

The 21 Line has broken below its up trend line. This is bearish. A break below the Zero line would, in my opinion, be a sell signal.

QUICK UPDATE, THURS. 22/10/09

The market (All Ordinaries Index) was down modestly today, -0.6%. Nothing dramatic.

The Advance/Decline Ratio was in the red at 0.81. That's in line with a down day.

However, UpVol/DownVol was in the green at 1.3. That's a non-confirmation of the down day.

The 20-Day NewHighs/NewLows (50 Leaders) were 8/2. Another non-confirmation. This appears to be in sync with the UpVol/DownVol figure.

The 50 Leaders were down -0.5% (outperforming the XAO).

The Small Ordinaries were down -0.8%. So there was some risk aversion in the market today.

The currency dropped intra-day, but was still obstinately above 0.92 USD at the time of writing.

Overall, one must still conclude that this is still a minor pull-back in the ongoing bull market.

Quick up-date. Wed. 21/10/09

I can't see anything in the past few days to suggest the beginning of a major decline.

The Advance/Decline Ratio is 0.944.

That confirms the decline in the general market - down a bit.

But the UpVol/DownVol ratio was bullish at 1.43.

That's a distinct non-confirmation.

NewHighs/NewLows also were non-confirming at 1/0.

The currency is sitting stubbornly around the 0.92 cents.

Small Ordinaries outperformed the Fifty Leaders today

Small Ordinaries up +0.55.

Fifty Leaders down 0.3%.

In a bearish market we expect the 50 Leaders to outperform the Small Ordinaries.

So - this looks like a normal pull back to wear off a seriously overbought state.

Of course, I could be wrong. Things could worsen very quickly. But, at the moment, we must presume that the bull will resume its uptrend. Until an external shock knocks this market for six - expect it to continue upwards.

Having said that - leadership seems to be changing from the Financials to the Materials.

Up date - 20/10/09

A strong day - XAO up 1.1%.

Advance Decline Ratio: 1.74
AdvVol/DeclVol: 2.98.

New highs/New Lows - 11/1

The Advancing Volume level is up where a small retracement usually occurs. This is about every two weeks during this recent bull rally.

We'll see what tomorrow brings. But the probabilities are sideways to down.

Update - 19/10/09

As expected, today was down. XAO -0.8%

Some risk aversion was evident with the defensive stocks among the best performers.

Consumer Staples, +1.0%
Telecommunications, +0.3%
Utilities, -0.1%
Health, -0.6%

But the breadth picture wasn't particularly gloomy.

Amongst the 50 Leaders newhighs/newlows, the split was even 2/2.

Advance/Decline Ratio was 0.87
AdvVol/DeclVol was 1.16

Small Ordinaries: 0.8%
Fifty Leaders: 0.9%

Nothing much in those breadth figures - but a slight bias to the up side.

As I said in the Weekend posts, the market is fragile - but not broken.

I'd expect a flat to up day tomorrow.

While the Ozzie Dollar stays strong - there's not much chance our market will fall in a heap.

At the time of posting, the Ozzie was back above 92 cents - so it is still looking strong - and positive for our market.

XAO - Week Ended 16/10/09 - CONCLUSIONS

CONCLUSIONS

This week the market continued up strongly from the gains of the previous week. The market, on the surface, is showing strength but internals, particularly divergent volume, Small Ordinaries, and technical indicators are suggesting instability. The 50 Leaders are as overbought as we’ve seen them. Although the market is showing fragility, the AUD remains strong and, as long as the upward trend continues, this should support further upward movement in the stock market.

Any unexpected news or shocks could throw this market into a significant correction.

While the “Number of Stocks above the 150Day SMA” remains above 50% and the weekly MACD remains positive, we must presume this bull rally is intact, albeit prone to sudden corrections such as we saw the recently.

I’m not on the side of the doom’n’gloomers predicting a catastrophic decline. This rally, on big volume, has been too strong to be predicting catastrophe. But – I think we must now expect a correction of some significance.

To finish, here's a little snippet I picked up this week: the Dow has crossed above 10,000 twenty-six times in the past ten years. So what's the big deal? - It's just been going nowhere for 10 years?

Cheers
Red

50 LEADERS

50 Leaders - Bullish Percent Readings

Last week (Fri, 9/10/09):
No. of Stocks above 10-Day SMA: 32 (64%)
No. Of Stocks above 50-Day SMA: 42 (84%).
No. Of Stocks above 150-Day SMA: 43 (86%).

This week (Fri, 16/10/09):
No. of Stocks above 10-Day SMA: 39 (78%)
No. Of Stocks above 50-Day SMA: 44 (88%).
No. Of Stocks above 150-Day SMA: 48 (96%).

On Thursday, 15/10/09:
No. of Stocks above 10-Day SMA: 45 (90%)
No. Of Stocks above 50-Day SMA: 45 (90%).
No. Of Stocks above 150-Day SMA: 48 (96%).

On Thursday, we also saw the extraordinary event where 20 of the 50 Leaders made New 20 Day Highs.

These figures are just too high.

The last time we saw figures like the Thursday ones, the market went down about 2.5%. The probabilities this time are similar – or it could be the start of even more carnage.

XAO - Indicators, 16/10/09

INDICATORS

The All Ordinaries Index (XAO)

Short Term (Daily):

MACD: Positive. New Buy Signal.
RSI: 66.8. Positive.
Slow Stochastic: 78.77. MACD Buys Signal negated by the negative cross below Slow Stochastic signal line.

Medium Term (Weekly):
MACD: Positive. Histogram shows a negative divergence from price.
RSI: 69.49. Positive. Right at the overbought level of 70.
Slow Stochastic: 76.03. Below its signal line and headed down. Negative

To summarise: This is not a market to be buying into. This is at best a “hold” market. The market is overbought and both Slow Stochastics are headed down in sync. Divergences on both MACDs suggest the next major move will be down.

Volume

This is an area of stock market analysis which I haven’t included except occasionally up till now. In recent weeks, however, divergences between volume and price action in the market have become marked. So it’s time to look more closely at this important section of market analysis.

Many commentators have noted with some concern that the bull market since March in America has been marked by steadily declining volumes. This is anomalous. Rising volumes usually accompany a rising market. That makes sense. As the market rises, investors become more confident and more people participate investing more and more money in the market. But, declining volume usually is accompanied by a lack of confidence which results, in the end, in a declining market.

Well – that hasn’t been the case with the Australian market. As the market has risen, volume has risen. As the market has corrected, volumes have declined giving way to further market rises. That is, until the past few weeks.

Following is a chart of daily volumes since before Christmas. Various seasonal patterns are evident in the volume figures. Naturally, with many people on holiday, volume drops off over Xmas and New Year. No great significance should be attached to that. Also, every three months, volume spikes with options expiries. Again, no great importance should be placed on those spikes. Recently, total volume spiked with a huge overseas cross-trade in GPT. Again – this has no significance. It is, however, important to note the trends clearly evident from the moving averages. To put the volume chart into perspective, here, firstly is a line chart over the same period for the XAO.

Since mid-August, while the stock market has been on a rip upwards, volumes have been steadily declining. We now have a clear divergence between the chart of the XAO and the On Balance Volume Chart. (On Balance Volume is a running total of volume calculated by adding the day's volume to a cumulative total when the price closes up, and subtracting the day's volume when the security's price closes down. It shows if volume is flowing into or out of a security. When the security closes higher than the previous close, all of the day's volume is considered "up" volume. When the security closes lower than the previous close, all of the day's volume is considered "down" volume.) This divergence between the XAO and the OBV suggests that there is now more selling pressure than buying pressure in the market.

Dr Alexander Elder has developed a more sophisticated use of the volume/price relationship. The Force Index relates the change in price to the change in volume by multiplying the change in price by the change in volume and plotting the result as a histogram. I’ve developed my own version of this, by plotting an 8-Day and 21-Day Moving Average of the histogram independently of the histogram. In interpreting this chart, the most important line is the 21-Day MA (shown in Red on the chart). When it is above Zero, the bulls are in charge, when below Zero, the market is bearish. Other factors are divergences and break of trend line when the trend has been in place for some considerable length of time. (The 8-Day Line has other uses, which I won’t go into at this time.)

This chart has fairly accurately defined the following:

1. The post-Xmas 2008 correction into early March.
2. Rally One from early March into June.
3. The June-July Correction
4. Rally Two from July to mid-October.

The current break of the up-trend line from July is an early warning sign of a correction. A break of the Zero line would confirm.

To Summarise: The current bullish posture of the market is not being confirmed by volume studies. This doesn’t mean that the market must fall here. The American market has had a bull run without confirmation from volume. But one must wonder how much longer the bullish stance can be sustained without sustained buying pressure to push it up.

Leading Indicators 16/10/09

Leading Indicators

Here are graphs for the two leading indices that I follow: Shanghai Stock Exchange Index and 10-Year Bond Yields (TNX – American Bonds). Both did well this week but remain below their respective 65-Day Moving Averages. On the TNX, every time recently that the chart has hit the 65DSMA, it has retreated. That now looks like the “line in the sand”. Unless both these indices can resume their uptrends this quarter, the outlook for 2010 looks grim.

Market Summary, Week Ended 16/10/09

Market Summary

The general market (XAO) was up this week, +1.85%, continuing the run of the previous week’s big move. Just like the Dow seemed to be targeting 10,000, this market seems determined on 5,000.

The XAO is above a rising 13-Day Exponential Moving Average. Nine out of ten SP Industry Sectors were up. The only sector down was, once again, Telecommunications. Once again, the Materials Sector topped the league tables

Best Three Sectors:
Materials: +3.31%
Consumer Discretionary: +2.92%
Information Technology: +2.73%


Worst Three:
Consumer Staples: +0.77%
Information Technology: +0.09%
Telecommunications: -1.51%

Risk Aversion was apparently absent with the two worst performers being Defensive Sectors while the other two Defensive Sectors were in the middle band.

Friday showed a little weakness after a reversal day on the market on Thursday. This may be the start of, at least, a short-term correction. (More on this later in the report.)

Among the sub-sectors: Property Trusts up, +0.81%; Metals and Mining, +3.34%; 50 Leaders, +1.77%; and Small Ordinaries, +2.03%. The 50 Leaders was marginally worse than both the XAO and the Small Ordinaries. Risk Aversion/Risk Inclination was evenly balanced according to these measures. Gold Miners took a breather this week (-0.4%) after a stellar run the previous week

Market Up-Date. Friday, 16/10/09

On today's early morning post, I suggested we were due for a pull back. After headed upwards early in today's session, it was all down-hill, confirming this morning's suggestion. How much more? Anybody's guess - but I don't think it's done yet.

Here's the run-down for today.

XAO - 4842.6. Down 0.4%

In the Industry Sectors, only two sectors were up:

Utilities: up +0.5%
Health: up +0.01%.

It is noteworthy that the both sectors in the green were defensive sectors.

The two worst performers were:

Financials: down -0.7%
Industrials: down -1.0%

Breadth was marginally positive. Advance/Decline Ratio: 1.08.

Like yesterday, Up Volume to Down Volume was in the Red: 0.98

The Ozzie $ fell back below the .92 cent mark today. Nothing much can be read into that on an intra-day basis.

This week-end I'll post an extensive update. One of my charts analysing price and volume is suggesting that a cautious approach to the market should be taken. A retracement seems to have begun.

More Breadth Figures - 50 Leaders 15/10/09

Here's some more breadth figures from yesterday.

From the 50 Leaders:

No. of Stocks making 20 Day New Highs: 20
No. of Stocks making 20 Day New Lows: One (Telstra)

Bullish Percent Figures:

Above 10 Day Moving Average: 90%
Above 50 Day Moving Average: 90%
Above 150 Day Moving Average: 96%

These Bullish % Figures are extreme. I'm expecting a pull back to work off that over heated quality.

FRIDAY MORNING UPDATE, 16/10/09

You'll hear in the finance news today that the American stock market was up overnight.

DOW - 10062.94, up +0.47%
Nasdaq - 2173.29, up 0.05%.

Well - I don't have to point out - there seems to be a big discrepancy between the Big Caps and the Tech Stocks.

I could go on and on about this - but there were some other big discrepancies. Breadth was poor with Decliners outpacing Advances on the NYSE, Nasdaq and AMEX. New Lows also exceeded New Highs on all three exchanges.

The big Sector winners on the AMEX were:

Energy, 2.09%
Utilities, 0.78%
Consumer Staples, 0.77%

The big losers were:

Industrial, -0.15%
Technology, -0.19%
Financial, -0.89%

Clearly, the Energy sector held up the Dow figures last night.

Conclusion - don't put a lot of faith in the Dow - which is usually the one headlined in the daily mass media.

Our market could be weaker today on the lead from the U.S. overnight.

MARKET UP-DATE, THURSDAY, 15/10/09

After a big opening, the market drifted down all day to finish up 0.6% at a new rally high from March of 4862.5. The market seems intent on heading for 5,000 (much like the Dow seemed intent on 10,000).

In the Industry Sectors, Materials and Industrials took the honours, both up +1.0%; while Telecommunications again tailed the field, -1.0%.

Breadth was positive. Advance/Decline Ratio: 1.56.

However, Declining Volume shaded Advancing Volume with the AdVol/DeclVol Ratio at 0.94. It is rare to see these two measures out of sync and suggests underlying weakness in the broad market despite the rise in the XAO. Following on from the overbought status of the 5-Day Average of the Advance/Decline Ratio mentioned in yesterday's notes, it suggests that the market is set for a sideways to down consolidation, or perhaps a significant correction.

The Small Ordinaries underperformed yesterday, up 0.4% - adding to the less than positive tone in yesterday's market. Strength in the Small Ordinaries is needed if this market is to keep heading higher.

The Ozzie Dollar broke above 92 cents today - that's where I've thought for many weeks that our $ was headed. There is a Technical Analysis argument that our $ is headed close to parity.

So long as our $ continues to show strength and international money continues to flood into Australia, our stock market should remain strong.

Market Update, Wed., 14/10/09

Good day today. XAO, +0.9%%, finished at 4834 a new rally high.

Energy was the strongest sector, up +1.6%. Meanwhile the hapless Telecommunications Sector was down 0.8% - the only industry sector down today.

Breadth was positive. Advance/Decline Ratio: 1.75. Strong - but nothing spectacular.
Advancing Volume/Declining Volume Ratio: 2.66.

The market is overbought and heading for a climax.

% of 50 Leaders above:
10SMA - 82% (overbought)
50SMA - 86% (overbought)
150SMA - 98% (Golly Gosh)

Can we see 100% above the 150DSMA? Highly probable.

The Advance/Decline Cumulative Total had another rally high today. But the following stats suggest that we're in shortly for at least a short term retracement:

Current 5DaySMA (Simple Moving Average) of % Advances/Declines = 61.4%.

The 5DSMA of ADV/DECL% has been above 60% six times since mid-April.

Five of those six times the market declined soon after for at least a couple of days.

The odd one out was in Mid-July which precipitated the current rally. That occurred after a significant decline and was part of a 13-Day consecutive run-up in the A/D Line.

Given that the current figure is occurring at the top of a rally (as in all but one of the cases) - not the bottom - the probabilities lie with a retracement of at least short-term duration.

The June-July correction was precipitated by a 5DSMA % reading of 60.3%.

Meanwhile, the Ozzie Dollar continues to rampage upwards - currently at .9129USD.

While the exchange rate continues northwards, our stock market will continue to do the same.

The On Balance Volume Chart is also showing a negative divergence to price suggesting that this rally is running out of steam.

Tuesday Update

Another strong day on the market today - up + 0.9%. Advance/Decline Ratio was solid at 1.55 and the net NewHighs/NewLows was seven.

So it's all hunky dory on the ASX.

The A/D Line has been up six days in a row - so we're probably close to a consolidation period.

Longer term the biggest problem for the market is the gradual lowering of volume traded. Unless volume picks up soon - this will probably have a negative result in a lower general market Index. Above is the volume chart since before Xmas 2008. The XAO can, of course, continue higher on lower volumes. But the probabilities become less and less as the volume gets turned off.

Gold ETF 12/10/09

The Gold ETF is still within the confines of the multi-month sideways consolidation. The chart is now sitting just below the upper boundary of the consolidation channel.

The Gold ETF has, over a two year period, a negative correlation with the All Ordinaries Index (XAO) of -0.9. That's close to a perfect inverse correlation; i.e., if the All Ords goes down, the Gold ETF goes up.

If the Gold ETF goes through that horizontal resistance level - expect further bullish upward movement. And that would be a negative for the Australian market.

Currency rates are now crucial. The Gold ETF is likely to go higher if the Ozzie Dollar goes lower - and the Australian market will go with it.

Any how - that's just how I see it.

Quick Run Down - Monday, 12/10/09

Flat day today. XAO, down 9 points, -0.2%, finished at 4745.5 after being up in the first hour of trade at 4789.1

Strong industry sectors today were two defensive sectors.

• Utilities +1.4%
• Telecommunications +1.1%

The weakest industry sector was the Financial Sector, down -1.1%.

Breadth was mildly positive. Advance/Decline Ratio: 1.16
Advancing Volume/Declining Volume Ratio: 1.035

Among the 50 Leaders, stocks making new 20 Day Highs/Lows: 7/0
This is a strong reading - but should be treated with caution as most of those new highs were intra-day, then fell back. So it could indicate a weakening rather than a strengthening trend.

That's all for now. I'll post a chart about Gold later on. The GOLD ETF is starting to look interesting - but too early to be sure.

Gold ETF

Here is the chart of GOLD. Gold weakened on Friday due to the rising currency rate for the Ozzie Dollar. The chart now has a confluence of price and three Moving Averages (13, 34 and 65). Sentiment against the American Dollar is very low (3-4% bulls). Sentiment readings can stay low for extended periods but invariably are good contrarian indicators. Just when the American Dollar might strengthen is a question of patience.

Gold has been in a sideways consolidation for four months now (June-September). A break from that consolidation will probably be strong and sustained. The probabilities lie to the upside.

Ozzie Market Report 9/10/09

Market Summary

The general market (XAO) was up this week, +3.22%, recouping all of the previous week’s losses and then some. The index is now at a new bull rally high. The XAO is back above a rising 13-Day Exponential Moving Average. Eight out of ten SP Industry Sectors were up. The only two sectors down were Health and Telecommunications. The Health Sector is dominated by export oriented stocks like CSL, Resmed and Cochlear. No matter how well these companies perform in their respective markets, they are being impacted by the strong Australian dollar. Telecommunications is dominated by Telstra, under threat from the Federal government. TLS is a natural defensive stock – not likely to outperform in a bull market; but the uncertainty about its future resulting from government policy has had a negative effect on its share price.

Of particular interest this week was the fact that only two out of the ten sectors outperformed the XAO. They were Materials and Financials. Of these, only the Financials recorded a new weekly bull rally high. This was a narrowly based surge lacking breadth.
Best Three Sectors:
Materials: +5.44%
Financials: +3.08%
Information Technology: +3.08%

Worst Three:
Consumer Discretionary: 1.13%
Telecommunications: -2.09%
Health: -2.38%

Risk Aversion was apparently absent with the two worst performers being Defensive Sectors while the other two Defensive Sectors were in the middle band.

Having said that, something is out of kilter. The Gold Sub-Sector (XGD) screamed up 11.73%. The Gold Index has been a consistent under-performer during the bull rally from March. This may be a ‘canary in the coal mine’.

Among the sub-sectors: Property Trusts up, +1.73%; Metals and Mining, +6.98%; 50 Leaders, +3.32%; and Small Ordinaries, +3.61%. The 50 Leaders was marginally better than the XAO but slightly worse than the Small Ordinaries. Risk Aversion/Risk Inclination was evenly balanced according to these measures. So the “Risk Aversion” evident in the readings of Telecommunications and Health may be due to other specific factors.

Chart One – Weekly % Change – Indices