As expected, today was a good solid day on the Australian market. The XAO was up +0.94%, and, apart from Telstra being slammed with the obvious fall in the Telecoms, the move up today was broad based as far as the Industry Sectors/Sub-sectors show.A/D Ratio was up at 1.74.
The Small Ordinaries outpaced the XAO by a wide margin. It was up +2.3% while the XAO only rose +0.94%.
Given all those figures I was surprised to see the Up Vol/Down Vol at a bearish 0.68.
At best, I think the market will be flat tomorrow - but more than likely down a bit.
Monday didn't follow the usual America penchant for being bullish. So - tonight in America, rather than getting a bearish Thursday we should expect a bullish Thursday. Dunno if that is logical - but it makes for a good story. :))
The chart of the XAO suggests that there may be a bit more in this counter-trend rally. The price has broken above the down-trend line.
Positive divergences from price exist on the daily RSI and the daily MACD Histogram - but the RSI and MACD are still at bearish levels (RSI below the mid-line and MACD below the Zero Line). Plus - the XAO is still below the 150-Day SMA.
So - I think we have a counter-trend rally - but it has a lot of work to do to return the market to a clear bullish stance.
Personally, I wouldn't buy this market with the view to holding for more than a couple of days. (Actually - I wouldn't buy this market at all at the moment. The current run-up might be all that is in it. It could go for another couple of days - but maybe not.)
Evidence as it emerges might change that opinion - but - in the meantime - I'm inclined to the cautious side.
Cheers
Red
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