Gold ETF - 30/6/2010

The Gold ETF had a solid rise today, up almost two percent.

It has risen above horizontal resistance set up by a relatively long sideways consolidation. That's a significant move. It also confirms my concerns in the previous post, that the XAO may not be setting up for a tradable rally. The Gold ETF looks like setting up for a tradable rally - but it would be rare for both to do so at the same time.

Cautious traders will wait for the daily MACD to cross over positively before adding to positions.

Cheers

Red

Market Comments 30/6/2010

I looked at all this above - and said to myself, How easy does it get. Like taking lollies off babies. Go long today - and hold - this is a tradable rally coming up - money in the bank.

hmmmm. Well I've been around long enough now to worry whenever I feel like that. Those babies with their pink little fingers barely holding on to those lollies, suddenly turn into 500KG Purple Gorillas. :) (They also go by the names of Hedge Funds and Goldman Sachs.)

Anyway - enough romancing, let's have a look at today in the context of the recent past.

Last night, in America, the S&P500 was down over 3% after Shanghai the previous day was down 4%. Predictably the Australian market showed a bit of panic selling as the nervous nellies shouted, Get me out. After the initial sell-off, our market was under accumulation for most of the day.

The candle on the day is a "hangman" - often seen at the end of a trend and finished at a 20-Day Low - often a reversal point. The XAO finished in the 4300 area - an area of solid support.

Looking at the Indicators, the daily Slow Stochastic actually closed above its signal line but below the 20 line - both need to be crossed to give a short term buy signal.

The 50-Leaders are showing extreme levels of "over-sold" on all measures.

So - all that suggests a bounce. A tradable bounce? Maybe not. We could go into a sideways consolidation before more downside.

The A/D Line is of particular concern. It broke the solid horizontal support which has been in place since lateOct/earlyNov 2009. That is now a distant eight months ago. It was resisted in both February 2010 and May 2010. That's powerful stuff - now broken. Expect more down side in the near future. (But not tomorrow.)

The RSI has taken on a bear market profile. Oscillating between 20-60. In bull markets it tends to oscillate on the XAO between 35-75.

We're a long way from hitting 20. I expect the XAO RSI to get down near there before we see a meaningful, tradable rise.

So - is it just like taking lollies of the baby? Maybe - perhaps I should check that I took my pink pills this morning. You know, the uppers. :)

Cheers

Red

Long Term View. 29/6/2010

Sometimes I wonder if all the talk about the current situation doesn't cloud out the long term view. So - let's make it clear. The following summarises much I've said in the past with just a little new information 1. This is year 0 in the decade cycle. Usually a poor year. 2. This is the second year in the presidential cycle. Usually a poor year. 3. That makes for a double whammy. More specifically. 1. the 13/150 DSMAs on the XAO have crossed negatively. 2. indicators on the XAO monthly chart are negative (10-Month MA, MACD, RSI, Slow Stoch) 3. the XAO 50/200 DSMAs have suffered a "death cross" - since then the XAO has gone back up to the 50DSMA and retreated, confirming the seriousness of the previous cross. (See chart above) I think it's time to buy in Nimbin - or better still, learn how to sell short.:) Cheers Red

Gold ETF - 29/6/2010

Gold ETF remains on "hold".

MACD above Zero, but below its signal line.

RSI, above mid-line, but only just.

W%R, above mid-line.

On the chart itself, today's candle held above the short-term uptrend line and closed just above the 18-Day SMA.

This is looking shaky - but no sell signal yet.

But - you have to make up your own mind. This is just my opinion.

Cheers

Red

XAO. Woolworths. 29/6/2010

Another low-volume down day for the XAO. Technical damage was done to the MACD with it crossing below its signal line - suggesting the selling is not done yet.

Punters seem to have stepped back from the market waiting for some buying to enter and hoping to follow the lead.

Although the market is now oversold, and due for a bounce, the situation is now set up for some big players to really hit the sell button, and possibly set off a panic sell-off.

The Advance/Decline Line (see second chart above) is now back to long-term support. A break below that would be a serious blow to market perceptions. It is one of the few indicators which hasn't broken below the lateOct/earlyNov 09 low.

The Advance/Decline Thrust chart is now down to the 0.4 area. This area is often where the market finds support. But you'll notice that it sometimes takes a week or two to climb back above that area. So we could be in for more selling yet.

Just when you get most negative - that's the time the market turns around. Are we there yet?.

"I Dunno," as my eldest granddaughter frequently says.

Watch the market indicators. Watch for a bullish engulfing candle. Then we might have a turnaround.

Woolworths - gave a "sell" signal today dropping below the 150-Day Moving Average and the RSI dropping below the mid-line.

Gold

Market Comments. 28/6/2010

The XAO was down 0.7% today. And remains in 'do not buy' territory.

The 50Leaders/Small Ordinaries continued to show risk aversion. 50Leaders down 0.6% while the Small Ordinaries down 1.2%.

We're probably coming to a short term bottom. Volume today was less than one billion shares traded, the first time in over four months. So there wasn't a lot of conviction selling today after increased volume on Friday.

The % of the 50Leaders above the 10-DaySMA has now dropped to 12% - an area where reversals often occur. 50Leaders above the 50Day and 150Day are also nearing the oversold level - but not quite there.

In the medium term, this market is looking bearish. Today was the second day below the supporting line of the recent uptrending channel. A two day break is usually evidence of a decisive break.

So any bounce will probably be short-lived.

As always - this is just my opinion - do your own research - and make up your own mind. Remember - I'm just a pixilatted chartist. :)

Cheers

Red

Gold ETF - 28/6/2010

On Friday, the Gold ETF gave a provisional "buy" or "add" signal.

Today's action makes no change to those signals. Today's candle is an inside day, still above horizontal and diagonal support.

It is locked between the 9/18 SMAs. A break above the 18DaySMA by the 9DaySMA would be an "add" signal.

A break by the daily MACD above its signal line would also be an "add" signal.

Continue to watch closely.

Cheers

Red

Woolworths 28/6/2010

This is an update for the weekend email clients.

WOW remains on "hold". If it had been down solidly - it would have given a 'sell' signal.

The Slow Stochastic has crossed over positively and has moved back above 20 - that's a promising sign. Other indications remain positive.

Cheers

Red

Market Comments. 24/6/2010

The market was down a few points today after initial euphoria over the Rudd "assassination".

The XAO finished today at 4504 - so we're still at the 4500 area.

The technical picture deteriorated a little today. The RSI broke below its up-trend line and is hovering around 50 (the mid-line). W%R did likewise.

The MACD remains just above the Zero line.

So - at this stage - there's no clear "sell" signal. Look for:

1. A break by the MACD below Zero
2. A break by the XAO below 4500 for two days.
3. The RSI below 50.
4. W%R below its mid-line.

Cheers

Red

A big day down today on the XAO -1.6%. We're now back to the critical support/resistance level around 4500.

Volume today was light - well under the 50-Day Average. That doesn't help the bears' case.

RSI was just under the 50 Level, but W%R clung to the upside of its centre line.

The Daily MACD is still above the Zero line - that's a positive.

So - at the moment, we've had a pullback. Natural and normal after a good rise.

Is that it? Maybe, maybe not - the next couple of days will tell. Two days below 4500 would kill this market. A bounce here - and look for further rises.

Cheers

Red

Additional comments, A.M. 23/6/10

RSI.4 has dropped below 80 warning of a possible short term trend change. StochRSI.30 remains in strong up-trend territory above 0.8.

MACD Histogram remains in an uptrend channel with no negative divergence from the price chart.

All that will change today. Enough to call a change in trend? Probably not. But we will probably see a second day of selling. Follow through selling is never a good sign.

Cheers

Red

Market comments. 22/6/2010

The above chart is closing time yesterday. You'll notice that the chart hit the 50-Day SMA yesterday and reversed. Some of the "old stuff" still works.

The XAO is currently in an upward sloping regression channel. Until the lower trend line is broken to the down-side, the short-term trend remains UP.

In yesterday's blog - I mentioned I thought the market was due for some consolidation. At this stage, today's reversal is just that - part of a consolidation process.

If this was to be a serious reversal, I'd expect the Gold ETF to be acting better than it is. Today it broke an important support level and seems likely to head lower. The Gold ETF tends to move inversely to the XAO. It's not one for one. Nothing is in the stock market. But it is a reasonable inverse confirmation tool.

So. We have XAO remaining in an uptrending channel. Gold ETF breaking down from recent highs. No confirmation by Gold so far of a trend reversal on the XAO. In fact - the exact opposite.

Today's action was significant. But until further evidence comes in - I think the trend is still up. (Unless you're in the Gold ETF - which looks suspect.)

Cheers

Red

Gold ETF - 21/6/2010

Gold is still hanging on to the precipice by its finger-nails.

The 9/18 SMAs are still positive.

The MACD, although below its signal line, is still above zero.

RSI is still above its mid-line.

Slow Stochastic has crossed above its signal line and above the 20 line. That's bullish.

A break below the supporting trend line on the stock chart would probably be the death knell for Gold. But that hasn't happened yet.

Cheers

Red

Market Comments 21/6/2010

Today's action was strong with the XAO up +1.3% on reasonable volume (although just a little below the 50-Day Average). The Index closed at 4633, close to resistance at 4800 and right at the 50-Day Moving Average. So it may be getting close to the end of a short term uptrend turning point.

The Slow Stochastic has turned below its signal line but is still above the 80 line.

No negative divergences appear on the significant indicators. So, any consolidation at resistance may resolve to the upside.

The 50-Leaders are short-term overbought and showing negative divergence. So this confirms the possibility of a short term consolidation/retracement.

The charts are, however, looking strong. And little sign of the possibility of a significant fall.

Cheers

Red

Market Comments 17/6/2010

The XAO was down 0.5%. That's a relatively benign figure.

As shown with the trend lines on the chart above, XAO is at the top of an upsloping trend channel which has a bias towards an upsloping wedge shape (bearish).

So we can expect the market to take a rest at such a stage. Only if it breaks below the lower trend line can we call a resumption of the bear.

Small Ordinaries were down just -0.2% while the 50-Leaders were down -0.7%. That seems to give the risk takers an edge.

On the other hand, the best performing sectors in the market today were Consumer Staples and Health . And that's not the stuff to inspire confidence in the market.

I think we're in for a short period of downward movement. If we break below the lower trend line, we've got a resumption of the bear.

Cheers

Red

Market Comments 16/6/2010

This post is a little late today. After a day of looking after two quite sick grand-children, I then had to face up to watching the State of Origin Match tonight. (What a chore. :) It really is hard work watching a Queensland side demolish NSW - for the fifth year in succession.)

So analysis took a back seat for a while.

The general market (XAO) had a solid day up today +1.2%. Advance/Decline Ratio was 1.9. UpVol/DownVol Ratio was a strong 3.7. Too strong? Maybe - expect a down day tomorrow.

Apart from that I can't see much reason for this market to slow down yet. Well, the contrarian in me is always looking for reasons for a market to reverse. Consider the following:

• the XAO is now at a 20-Day high. That's often a turning point.
• The 50-Leaders now has a reading of 94% of stocks above the 10-Day MA. That's too high on a historical basis.
• The Slow Stochastic is overbought (over 80).
• Volume has been dropping off as the market has risen suggesting a lack of conviction by investors in this rise.

On the other hand, no serious divergence from price has occurred on the MACD Histogram or the RSI. That usual occurs before a medium term downturn.

So we may be looking at a couple of days consolidation. Then we can re-assess the situation.

Cheers

Red

Market Comments 14/6/2010

The market was up a smidgin today. In percentage terms it was up 0.0%. Nothing. Zilch. Nada. As flat as a mill pond. Boring.

I wish I could offer some amazing scintillating insight. But I can't. It is what it is. Flat.

The RSI still lies at about 50 - the mid-line. The Williams %R is close to zero - the top of the range. That doesn't mean a lot with a fast moving indicator like W%R. I only use it as a check against overexuberance on the RSI. If W%R is going down while RSI is relatively flat - disregard the RSI.

Volume was low today. Just over one trillion shares trading against a 50-Day Average of about 1.4 trillion. That just confirms the unwillingness of traders/investors to park money in the market as indicated by the flat Index.

Momentum appears to be slowing, but that can pick up again.

I'm still bearish long-term - but undecided short term.

Cheers

Red

Market Comments. 10/6/2010

The market (XAO) was up today by 1% - on higher volume than we've seen the past few days - but still nothing startling.

Welles Wilder's DMI is still showing a market in a downtrend. (DMI- still well above DMI+). The ADX remains elevated. Recent sideways to up action appears to be a counter trend rally.

On the other side of the coin, the action in the newhighs/newlows yesterday showed a promising break higher and today made a decisive move higher. This chart is based on the net number of stocks in the 50-Leaders making new 20-day highs or new 20-day lows. It is a measure of the internal strength of the market.

So - we have a market showing some strength.

The bottom line is - it is still in a trading range.

Up- above 45o0

Down - below 4300

Those are very rought figures - and a decisive break either above or below resistance/support is required.

Cheers

Red

Gold ETF - 9/6/2010

Gold ETF is trading in a range at the top of the recent parabolic rise.

A break either up or down from that range will decide future direction.

This provides confirmation of the recent trading range on the XAO - Gold ETF tends to trade inversely to the general Australian stock market. In sideways action - both will be trending sideways.

So - we shall wait on the market to tell us which way it is going.

Cheers

Red

Market Comments. 9/6/2010

The market today (XAO) was up just 1.4 points - not enough to register a percentage rise. The percentage rise today was 0.0%

So - today was a non-event on the stock market. hmmm. maybe.

Looking at net newhighs/newlows on the 50 Leaders, this chart just nudged over the 5-Day MA today. hmmm.

Maybe the internals were a bit stronger than the general market.

What does that mean? Well - the market, as measured by the 50-Leaders was held back by a couple of stocks, but the underlying strength of the market was good.

Looking at the Advance/Decline Ratio and the AdvVol/DeclVol Ratio - there was a discrepancy.

A/D Ratio was below 1 (bearish), the AV/DV Ratio was above 1 (bullish).

So - the market internals were pointing to a slightly more positive day today than suggested by the raw Index figures.

Let's not make a new mountain (trend) out of a mole hill (a sideways movement).

The market is still within the trading range 4500-4300 - until it breaks out of that, one way or another, the market is in limbo. But at least the internal strength today gives some hope to the bulls.

On the other side of the coin, the Small Ordinaries today was down -0.4%. So, maybe, the internal strength in the 50 Leaders was just a matter of institutions switching into less risky big cap stocks.

Let's wait:

Up - above 4500

Down - below 4300.

Cheers

Red

Market Comments. 8/6/2010

The market had a nice bounce today. Up 1.2%. It remains within the bounds of the trading range: in rough figures 4500-4300. Until we see a breach one way or the other of that band, I'd keep my hands in my pockets.

The market, although up, had, on balance, a defensive posture.

• 50-Leaders +1.4%,
• XAO (All Ordinaries) +1.2%,
• XSO (Small Ordinaries) +0.9%

The two best performing S&P Industry Sectors were both Defensives:

• Telecoms +2%
• Utilities +1.7%

That tells us that the "smart" money (institutions) are still playing it very cautiously.

The indicators on the XAO chart show a mixed picture.

• 9/18 SMA has had a positive crossover, but that is negated by the fact that the cross-over has occurred while the chart is below the two SMAs.
• the MACD is positive (above its signal line) but below the Zero line.
• the RSI is heading up but still below the mid-line
• the Slow Stochastic is still below its signal line and heading down.

On balance - that's a stand aside market - no clear direction.

Let's wait for clear direction.

Cheers

Red

Market Comments. 7/6/2010

Today was a remarkable day. The AdvancingVolume/DecliningVolume ratio on the Ozzie market was just 0.1. That means that 90% of volume went into declining issues. That sort of ratio is seen regularly on the American market, but not on the Australian market. I only have statistics going back one year, but that is the lowest reading in the past year.

Today's volume was low. )Volume today was 1160M shares compared to a 50-day average of 1437M shares.)

On a low AV/DV day, I would expect volume to be above average. But not today.

What does it mean?

It could well suggest that we saw an intermediate low today - or we are very close to one.

Given seasonal factors, I'm loath to make such a suggestion - but that's the way the evidence points.

Cheers

Red

Late Blog 7 June

Hi Folks,

The blog comments today will be posted late tonight due to some family commitments.

Just an initial impression - volume today was very low. The AdvancingVol/DecliningVol was extremely low.

It looks like scared "dumb" money running for the hills. But - maybe I'm the dumb one. :)

More later tonight.

Cheers

Red

Market Comments. 3/6/2010

The XAO busted up above the 18-DSMA today. The MACD is positive. The RSI is positive.

Short-term that is looking good.

Longer term - the MACD is below its signal line, the RSI is below 50, and the DMI- is above the DMI+.

So - we have more upside to come - probably.

To me, this still looks like a counter trend rally.

So - while blue skies and gentle winds blow - take a balloon ride and enjoy the view. If the wind blows up and dark clouds loom - start to look for a convenient landing place.

Cheers

Red

Market Comments. 2/6/2010

Today more or less repeated the previous two days. Down a bit (-0.7%), but nothing to get excited about. Volume was ordinary.

This still looks to me like a bull flag developing.

The past four days, the market has been located between the 9-DSMA and the 18-DSMA. A break above or below one of those should provide near term direction.

The market took on a slightly more defensive tone today.

• Small Ordinaries: -1.3%
• Twenty Leaders: -0.5%

The Advance/Decline Ratio was 0.63%. Low - but not especially so.

So - I think today was more "noise" than definitive action.

I still believe that in the longer term (e.g., the MACD is below the Zero line), the market looks bearish, but in the shorter term, the odds favour some more upside (e.g., the MACD is above its signal line). The pullback over the past three days has been on lower than average volume.

A big down day tomorrow would change all that. A big up day would be a short term buy signal, IMO.

Cheers

Red

Market Comments. 1/6/2010

Again, nothing much happened today. The market was down 0.4%. Volume was well below average.

If anything there was a slightly more defensive tone to the market with the four defensive sectors all doing better than the market benchmark, the XAO. But really, nothing decisive can be read into that.

The chart of the XAO could be forming a bullish flag - but we'll have to wait for a break higher to be sure of that.

We remain in the hands of the overseas markets.

Cheers

Red