Monday Market Comments 30/11/09

On the surface, today was a strong day on the market, up +118 points on the XAO, +2.6%.

This was a fairly narrowly based move. The only Industry Sector to outperform the XAO was the Financials Sector, up +4.2%. The Advance/Decline Ratio was only 1.6. That's more like the ratio you would expect on a 40 0r 50 point up day.

Small Ordinaries was up only +1.2% while the Fifty Leaders was up +3.0%, and the 20 Leaders were up +3.2%.

The Financials Sector has recently been the worst performing sector in the market. While we must acknowlege the strength of today's move in the general market, much of the movement seems due to a short squeeze in the Financial Sector.

So - it was a strong day - but the strength must be looked at with a certain skepticism.

This was more like a 1.0-1.5% up day than a 2.6% day. After last Friday's big down day - an up day was expected. Let's see what follow through buying there is in the next couple of days before believing that this is returning to the long-term bull rally conditions.

Market Comments, week ending 27/11/09

The market is currently in a counter trend channel (see bottom chart) within the main uptrend channel which began in early March. That’s the dominant force in the market. Chances are that the market will resume the uptrend in the near future as the first half of each month recently has been strong. But – a break of the red-dotted channel line and a drop below 4515 would be very bearish.

The Bollinger Band chart (at top) provides another way of conceptualising the trend. The mid-line shown above is the 50-Day Simple Moving Average. Above and below are three lines each is One Standard Deviation further away from the mid-line. Since this bull rally began in early March, the XAO has spent most of its time above the +1 Standard Deviation Line. This is the Buy/Sell Line. Pull-backs are clearly shown dropping below that line, and the resumption of the trend has been signalled when the XAO climbed back above the +1 SD Line. Only once (before Friday), has the XAO fallen below the Sell Short Line, which is -1 Standard Deviation below the 50-Day SMA. That was not a decisive break and the XAO quickly recovered. It also dropped below the -1SD Line on Friday. If it recovers quickly, as it did in July, then the probability of the major uptrend reasserting itself is strong. If the XAO continues to drop below that line, then this market is in trouble.

Market Comments 26/11/09

Nothing much to say today. A small drop in the XAO kept the market in the sideways consolidation its been in for over two weeks.

With Thanksgiving in America, we're unlikely to see any dramatic news from there to change market direction.

Gold in Ozzie Dollars continues to power upwards. This is a concern for the wider market. It is unusual to find gold (in Ozzie) and our market also going up.

Other concerns are the Japanese market which has dipped into bear market territory. Also, the American 10-Year Bond Yield, after showing some strength, has adopted a bearish downward slant.

Although it has been widely reported that the American Dollar has plumbed new lows, our Dollar is still well below new highs. So don't be seduced into thinking that a very significant fall in the American Dollar translates into a positive for our market.

To sum up - our market as gauged by the XAO continues in a sideways consolidation. Until it breaks from that consolidation, patience is required.

Wednesday Comments, 25/11/09

Wednesday was a strange day. The market traded in a narrow range for most of the day. Then in the last half hour it broke upwards quite strongly to finish up +0.7% for the day.

Despite that there was a decided defensive feel to the final figures. The 50 Leaders were up +1.0% while the Small Caps were only up 0.1%. Telecom Sector, a defensive sector, was the best performer on the day, up 2.3%. Health also performed well, up +1.2%. The A/D Ratio was a slightly bearish at 0.98. But UpVol/DownVol was a reasonably bullish 1.65. Given the late surge and the numbers for the 50 Leaders, it looks like a lot of action was centred on a few of the large cap stocks.

The market is still within the consolidation range. So nothing has really changed today from the past few days. We're still waiting on the market to show us which way it is going to head.

Interestingly - volume returned to normal today (about 1.5Billion shares traded). Volume has been low for the previous four days. Again, I can't see that much can be read into that.

Late Night Edition

Nothing more to add to today's earlier comments.

Let the market do the talking.

Quick After Market Comment 24/11/09

Today's action had a lot of negative vibes. The UpVol/DownVol Ratio was a bearish .55.

The last three days show a white candle sandwiched between two black candles. This is usually bearish.

But ... until the market breaks one way or the other out of the current sideways consolidation, judgement needs to be withheld.

The volume for the past four days has been very light. This is indicative of the indecision the market is currently displaying. It's building up intensity for a strong move. Which way is the question. Although I have a bearish bias, we have to let the market show the way.

I may add to this blog later tonight after I do some more analysis. But I don't think any further evidence will sway my initial impressions of today's action.

Market Comments 23/11/09

The market remained in limbo today. Another inside day - modestly up at 0.7% So the market remains between the two key levels: 4820 and 4690. This is only a gap of 130 points.

The materials were up strongly at 1.7%. Financials were down -0.1%. Consumer discretionary was line ball with the XAO at 0.7% after Jerry Harvey gave a bullish account of pre-Xmas trading. Industrials were up reasonably at 1.2%. But the defensives were equal to or better than the broader market: Consumer Staples +1.0%, Health 0.7%, Telecommuniccations 0.8% and Utilities 1.0%.

It's very difficult to read anything of substance into those figures.

At the time of writing, American futures are up strongly at +86. Rarely do we see a down day when the futures are up that strongly even though there is some time to go before the American market opens.

The Ozzie Dollar was up about half a cent - and this supported our market.

Gold in US$ is currently at $1166 - up strongly from Friday.

Gold in AUD was up over 2.05% today. It's difficult to reconcile a rise in AUD-Gold and a rise in the XAO. Something has to give. This is against the "natural order" of asset markets.

We'll have to wait and see which way it turns.

Weekly Summary week ended 20/11/09

Market Summary

The general market was down slightly this week after being up Monday, then sideways for three days and then down on Friday. The XAO was down -0.34% on the week.

The XAO finished on a rising 13-Day Exponential Moving Average which may provide support. Only three S&P Industry Sectors were up for the week.

Best Three Sectors:
Materials: +2.72%
Consumer Staples: +1.37%
Utilities: +0.26%




Worst Three:
Financials: -2.33%
Industrials: -2.37%%
Information Technology: -4.39%

Among the sub-sectors: Property Trusts were down, -0.37%; Metals and Mining were up in line with Materials, +2.78%; and Small Ordinaries, -0.25%. The 50 Leaders under performed the XAO at -5.2% and performed less well than the Small Ordinaries. Risk Aversion/Risk Inclination was weighted to Risk Inclination on that measure. Gold Mining was up at +4.36%.

The market seems to be sending a message that all is not quite right with our local economy (financials and industrials down, defensives up) while the world economy (read China and India) is healthy providing support for our cyclical export oriented industries (Materials/Metals and Mining). Interpretations of the recent minutes of the Reserve Bank are suggesting that interest rates may not be raised in December. If the most hawkish central banker in the world (Glen Stevens) doesn’t move this December, then that may confirm concerns about the local economy and give weight to the Labor Government’s expressed intention to continue pumping the economy with stimulus money. Still – there’s a lot of ifs and buts in there. And perhaps we shouldn’t read too much into one week’s movement in the indices.

MARKET COMMENTS. 19/11/09

The market finished with a small gain today, the XAO up +0.2%. After being up early, the market sold off most of the day to finish with a short spurt which took it back into positive territory.

The day's trading lacked breadth. The Small Ordinaries was down -0.5%, while the 50 Leaders were up +0.4%. Only two of the ten Industry Sectors were up, and they were the two big ones, Financials, +0.6% and Materials, +0.4%. Financials have been oversold recently, so were due for a bounce.

Overall, the market lacked much conviction, but the bears still haven't overcome the bulls. This market is still in "indecision" mode. The market has basically been going sideways for eight days now, and today's trading represented an "inside" day. These are often followed by a range expansion day. So we could see a big move tomorrow which will determine the further short term direction of the market. We continue to wait for the market to show us the way.

Market Comments. 18/11/09

Another reversal down day on the XAO. That's three out of the past five days that we've had reversal down days. (See the long 'wicks' on the candles.) And they've occurred right at overhead resistance. The bears are trying to break this lower, but haven't succeeded yet.

MACD still hasn't risen above the zero line.

UpVol/DownVol was positive today at a mildly bullish 1.6.

Small Ordinaries were down -0.2% while the 50 Leaders were up +0.3%. So risk aversion was evident in the market.

I think today was a tie between the bulls and the bears. The current impasse will be broken soon. Just which direction - I haven't a clue. I'll let the market show the way.

Up - above 4817 on the XAO.

Down - below 4706.

Market Comments. 17/11/09

Despite the big move by the American market last night, the down movement I expected from yesterday's Australian action occurred today.

The switch out of Financials and into Materials continued with a vengeance today - but not enough to keep the market positive.

Apart from the Materials, the only sectors positive today were three defensive sectors: Consumer Staples, Health and Utilities.

Small Ordinaries(-0.3%) didn't fare as badly as the 50 Leaders (-0.6%). So some appetite for risk remains (as evidenced by the positive showing in Materials).

The five-day average of Advancing issues turned down today. The last time that happened was in mid-October which led into the big retreat finishing in early November. A turn down in this indicator is often (but not always) the beginning of a retreat.

Follow through selling tomorrow would be very bearish.

Market Comments. 16/11/09

A strange day today. Financials were down. Materials and Energy were up strongly.

The Advance/Decline Ratio was positive at 1.39. UpVolume/DownVolume Ratio was a very strong 4.96. Go figure. This means that a lot of volume was going into a relatively much smaller proportion of stocks.

The market is getting out of whack.

Combine that with fact that the Gold/XAO Ratio was a strong mover today, and you can see how out of kilter things have become.

The momentum from today's UpVol/DownVol Ratio will probably continue through to tomorrow. But things have to come back into equilibrium.

After another day or so, I'd expect the general market to fall.

It's All About The Dollar

For many weeks I’ve been saying: This market won’t start to drop until we see the Ozzie Dollar start to weaken. The Ozzie Dollar is now range trading between about 90 Cents and 93 Cents. A decisive break from the current range should see a similar move in the stock market. The following chart is a bit “messy”, but shows the major consolidations of the Ozzie, the Rising Wedge and Moving Averages. A decisive drop below 90 Cents would be bearish for the stock market.

Weekly Summary

Market Summary

The general market was up strongly early in the week to fade over the last two days. The XAO was up +2.57% on the week. Thursday saw a remarkable reversal day to the downside and this weakness carried through to Friday.

The XAO is above a rising 13-Day Exponential Moving Average. All ten SP Industry Sectors were up.

Best Three Sectors:
Information Technology: +6.26%
Materials: +4.04%
Consumer Discretionary: +3.61%


Worst Three:
Financials: 1.63%
Health: 1.52%%
Utilities: +1.51%%

Among the sub-sectors: Property Trusts up strongly, 4.24%; Metals and Mining, +4.09%; and Small Ordinaries, +3.53%. The 50 Leaders under performed the XAO at +2.3% and performed less well than the Small Ordinaries. Risk Aversion/Risk Inclination was weighted to Risk Inclination on that measure. Gold Mining was up at +2.4%.

Long Term Trend

The long-term trend is determined by the 13-Day SMA and the 150-Day SMA. It is currently positive.

CONCLUSION: LONG TERM INDICATORS ARE GIVING A “HOLD” SIGNAL.

Market Comments 12/11/09

Choppy reversal day today which didn't tell us much.

The daily candle was a "shooting star" which is theoretically bearish but not particularly reliable.

Advance/Decline Ratio was 1.13, mildly bullish. But the UpVolume/DownVolume was 0.82 - mildly bearish.

There were six new 20-day highs today from the 50 Leaders. That's the best we've seen for 14 days. But of those, five out of the six were intra-day highs which had reversed below the key level by the end of the day.

So - I think we have to take our cues from support/resistance and overbought levels. The market reversed off a key resistance level and stocks above the 10-Day SMA remains over bought at 80%. On those figures I'd expect more sideways to down action for a couple of days.

XAO Channel

Here's a chart of the XAO since Dec. 08. The index is now at a critical horizontal resistance level and just below the mid-line of the up sloping channel. As it is now overbought - this looks likw a logical place for the market to selll off. There might be another day in it. Of course, rampant bulls might have other ideas.

Market Comments - 11/11/09

Bit of a nothing day today. Opened up about 20 points, long sideways drift all day, closed up about 20 points.

The market continued into overbought territory with 92% of the 50 Leaders above the 10-Day Moving Average. This is now above the level it was at in the middle of October when the market sold off.

A little risk aversion evident today with the 50 Leaders up +0.5% marginally better than the Small Ordinaries at +0.4%, but nothing much in it.

Will it sell off tomorrow? Dunno - but the odds are higher now than on any of the previous three days.

Market Insights - 10/11/09

And the market is at significant resistance. We'll know tomorrow. Guts or glory.

Market Insights - 10/11/09

Ok - tomorrow is guts or glory.

The market is oversold.

Market Up-date 09/11/09

Once again the market is getting close to overbought in the short term.

The % of the 50 Leaders above the 10-Day SMA is getting close to the 80% level. The last time it was over 80% was 15th October - the beginning of the most recent pullback. One more day up should be the end of this small counter-trend movement (if today wasn't the last).

Gold/XAO Ratio Chart

The Ratio Chart of Gold/XAO is supporting the bearish prognosis for the general market.

In the past, it is bearish for the general market when the chart line of Gold/XAO rises above the 55-Day Moving Average. That happened this week. It is also a good sign to hedge by investing in the Gold ETF.

Week End Wrap - 06/11/09

The Indicators on the XAO are currently flashing a "sell" signal.

1. MACD below the Zero Line
2. RSI below 50.
3. Williams %R below -50.

From past experience, the probabilities now lie to the down-side on a medium term basis.

The market is currently very oversold - so some short-term positive action can be expected. But I'm not expecting it to last.

Market Wrap-up, Thursday, 5/11/09

Market action was a bit wierd today.

The market was down -0.6%. But it was the defensive stocks that were slaughtered.

Telecoms -2.0% and Utilities -1.9%.

UpVol/DownVol was poor at 0.42%.

I have to interpret that as being bullish. Why? UpVol/DownVol deteriorated in the afternoon after being up marginally at lunch time. The sectors disadvantaged were the defensives. So it seems that institutional selling (selling in the afternoon) was concentrated somewhat in the defensive sectors. The institutions appear to be positioning themselves for a bullish move.

Gold ETF

Gold ETF confirmed a new up trend today with a break above a key resistance level and a break above the 150-Day SMA.

Market Wrap - 04/11/09

The All Ordinaries Index was up marginally today +0.2%.

Breadth was marginally negative with an Advance/Decline Ratio of 0.95.

In the 50 Leaders, NewHighs/NewLows were 1/12 which is quite negative.

Only six percent of the 50 Leaders were above the 10-Day Moving Average. That figure is too low.

Expect more sideways to up movement.

The rest of this week will be dominated by two events in America. Tonight the Federal Reserve meets to announce interest rate settings.

On Friday night, American jobs data is announced.

Either or both of these could have a big impact on the market, one way or the other.

The sideways action over the past couple of days is not unusual leading up to such important news events.

Gold:XAO Ratio

The Gold:XAO ratio broke decisively upwards today above the critical Moving Average. This adds further weight for the bearish case against the Ozzie stock market - and more ammunition to the side of the GoldETF as a hedge.

Market view -3rd November, 2009

Well - I backed the Melbourne Cup winner today. Woo hoo.

Stock market

The market finished virtually flat today.

New lows increased again today (11 new lows) without any new highs.

Stocks in the 50 Leaders,

* above the 10-Day SMA - 2%
* above the 50-Day SMA - 18%

This is too low - expect a bounce - but I don't think there'll be a lot in it. (I made the same call yesterday. Well, we didn't go up - but we ended flat - that's close enough? Maybe I'll get it right for tomorrow.)

Market view - 2nd November, 2009

I can't imagine a situation where a bounce is more due than the present time.

Here's the stats for the 50Leaders:

Above 10-Day SMA: 2%
Above 50-Day SMA: 18%
Above 150-Day SMA: 78%.

The 10-day reading is grossly oversold.

The 50-Day reading is oversold.

The 150-Day SMA has come off an overbought level where it's been for weeks - which allows for some wiggle room.

Given the "grossly" on the short-term, and the "over-sold" on the medium-term, and normalisation on the long-term, it looks like a lay-down misere for tomorrow.

I bet its up tomorrow. But - not for too many days in the future.

Cheers