Market Comments 29/7/2010

Today, the puppy was sleeping.

The XAO was down -0.13%.

The chart above shows a clear upsloping wedge - which is bearish. RSI is knocking on 60 - a level which denotes overbought in a bear market (but nothing of significance in a bull market). So if we get a drop here, that would confirm the bear market diagnosis.

Nothing much else to note today.

We wait on the next couple of days.

Cheers

Red

Market Comments. 28/7/2010

This little puppy is ready to go to sleep. Will it fall out of bed? I dunno. But the next couple of days should tell.

Here's one tell-tale sign: the XAO today was up +0.6%, the Fifty Leaders were up +0.8%, the Twenty Leaders were up +1.0%, Small Ordinaries were up just 0.2%.

That's a flight to quality, risk aversion is raising its head once again.

Next, let's examine the 50-Leaders. Yesterday, 70% of them were above their 10-Day Averages. Today, 66% of them are above their 10-Day Averages. So, even on a moderately strong day, with a flight to quality, the number of blue chips above their 10-Day Averages declined.

So - this was a very narrowly based rise.

Trading in the 50-Leaders is dominated by the big institutional investors. Somewhere in there were people taking on defensive positions.

It won't take much to knock this market down a peg or two.

Does this mean a return to the lows of early July? I have no idea. But the strength of the pullback (if it occurs) should provide some clue. Shallow - then it is just consolidation. Steep - look out below. :)

Cheers

Red

Market Comments. 27/7/2010

Today we had a narrow range day with a reversal. A little stumpy candle. These often occur at the top of a range.

Similarities with the current situation and the high of mid-June are clear. The market has just risen above the 65-Day EMA. RSI is pushing up towards 60. Slow Stochastic is pushing above 80.

None of that necessarily means that the market will reverse here. But given that it is all happening around the critical resistance area of 4500 increases the probabilities.

Price is always king. Until we break below the uptrend line from early July, the trend is still up. But the odds of a reversal are beginning to increase.

Cheers

Red

Market Comments 26/7/2010

The general market (ASX200 - XJO) had a solid day today confirming the good day on Friday. The XJO was up 0.62%. Not spectacular but solid.

The Index is now above the 65-Day EMA and the three key Indicators (MACD, RSI & W%R) are all above their mid-lines. That's a bullish pattern.

I've included a chart today of the Small Ordinaries (XSO) because the Small Ordinaries tend to lead the market both up and down.

Of particular interest here is the fact that the XSO is well above the early February low, which also equates on the XJO with a critical resistance area around 4500 - right where the XJO is currently placed.

So - we have a strong positive divergence by the XSO from the XJO - that's what we need to see to confirm a bull trend.

Cheers

Redb

Weekend Report. Week ending 23/7/2010

This is the summary and conclusion from my long weekend report sent out to email subscribers:

Domestic Market:

Long term: bearish
Medium term: neutral swinging to bullish, must overcome overhead resistance
Short term: bullish, must overcome overhead resistance.

International

VIX (Daily): Bullish descending triangle needs to break lower to remain bullish.
SPX Daily: bullish overhead resistance, momentum slowing.
Shanghai (Daily): Bullish ascending triangle needs to break higher to confirm
Copper: Break out from Symmetrical triangle bullish

Advance/Decline Line: Positive Divergence from XAO - bullish

50-Leaders: Bullish

Sector Analysis: Neutral leaning to positive

Ozzie Dollar: Bullish technicals suggest a reversal may occur.

I'm particularly taken by the leading upward divergence on the Advance/Decline Line and the break-out in Copper.

The Australian market had an OK week, with Friday clinching it for the bulls. Internationally, the picture is strongly to the upside.

Generally, the chart patterns are supportive of a medium term up-trend. Downtrend lines from April have been broken to the upside. MACDs are either above or only a little below their Zero lines.

An American Summer Rally appears to be in place and may have another couple of weeks to run. For that to happen, serious overhead resistance has to be overcome but that's the nature of rallies until they finally break-out into blue sky. Our market, although not as strong as some of the key overseas markets, is following suit.

Reporting Season remains in place in America. Unexpectedly good or poor results can quickly skew the market. The skittish nature of this market was shown on Thursday and Friday. A pessimistic report from Bernanke sent the market down on Thursday. Good company reports on Friday sent the market up. A couple of strong days, one way or the other, could have a profound effect on market direction.

When I reflect on all of that, I feel quite comfortable with the conclusions. And I'm looking to further upward movement in the medium term (two weeks or longer).

And that makes me wary. :)

All those divergences, aligned with some key resistance areas could impact this market. But - price is king - until the up-trend lines get broken to the down-side, I'll stay with the trend, which currently as far as I can see, is up.

Cheers
Redb

Gold ETF 22/7/2010

The Gold ETF remains more or less as it was yesterday, within the bounds of a falling wedge.

The Slow Stochastic has deteriorated further suggesting that the next move will be up.

If the Gold ETF moves up decisively, that would be a negative for the general market.

Market Comments 22/7/2010

The Australian Market (XAO) remains indecisive. The Slow Stochastic and the RSI are about their mid-lines. The MACD Histogram continues to narrow and sit around the Zero Line.

Volume remains low. Investors are just not interested in this market.

Sleepy markets invariably resolve into strong moves one way or the other.

Watch for an increase in volume.

Cheers

Red

Gold ETF 21/7/2010

The Gold ETF appears to be at a crucial stage.

The chart is at the 89Day SMA (a favourite of mine for reversals).

The chart is clearly in a falling wedge pattern.

The MACD Histogram is showing a positive divergence from price. So is the Slow Stochastic. Neither of those divergences mean a lot unless we also get a move up here. A move up here would be bullish for the Gold ETF.

A fall below the 89DSMA and the falling wedge would be bearish for gold. And bullish for the general australian market.

We shall see.

Cheers

Red

Market Comments 21/7/2010

NewHighs/NewLows on the 50 Leaders says the market is going higher. (See bottom Chart).

The Advancers/Decliners Thrust chart says momentum is weakening. (See middle Chart).

Today's candle stick (top chart) was a "doji" - signifying indecision.

The MACD is just under the Zero level.

The RSI is at its mid-line.

The Slow Stochastic is at its signal line.

All of that is about as indecisive as the charts get.

Surely tomorrow will provide direction? At least for the short-term.

Cheers

Red

Market comments 20/7/2010

Today saw a nice up move, 1.1% on the XAO.

Did much change? Unless you're a day trader - no.

MACD remains below the Zero line.

RSI is at its tide-line - where it's been, more or less, for the past week and a half.

The Slow Stochastic is still headed down - for the past week and a half.

The market has gone nowhere in that time. Oscillating a bit up and down - but no definitive movement.

The XAO remains below the 50-Day SMA - until it breaks above that key level - I'll wait befor calling a new uptrend.

Today's up movement was accompanied by an increase in volume - the best since the beginning of July. That may be a positive. Maybe.

NewHighs/NewLows (50 Leaders) today were weighted to the down side 2/4. That's unusual on a strong up day - suggesting a less than broad advance.

The XAO remains below the 50-Day SMA - until it breaks above that, I'll refrain from calling a new uptrend.

Today's action was positive - and the MACD has a strong positive bias to the upside.

So, it is looking good. But, until it proves itself, I'll sit on the sidelines.

I'd like to see a move by the MACD above Zero, a move by the RSI above the tide-line, and a break by the Slow Stochastic above its signal line.

Cheers

Red

Gold ETF 20/7/2010

The Gold ETF fell today - an inverse correlation to the general stock market.

I don't expect an extremely high inverse correlation between Gold ETF and the XAO - but today it did occur.

What is interesting is the positive divergences setting up on the Gold Indicators - MACD Histogram and the Slow Stochastic.

They're hinting at a rise in the Gold ETF - and that would? translate into a fall in the general market (XAO).

We'll see.

Cheers

Red

Market comments 19/7/2010

Today was a solid one-day down event. -1.5%. But hardly dramatic. It was not unexpected given the big down day in America on Friday. Our drop was not nearly as big as the American event.

I'm not too interested in the extent of a one-day event (unless it is one-day cricket).

There's probably a bit more downside to come - but not tomorrow. (Famous last words?)

Volume today was still below the magical 1000million mark on the XAO. Almost unheard of. Nine out of the past eleven days have registered below the magical level.

Until this recent run, only three days since mid February were below the magical number.

I don't know what is causing this. But - it means we're coming up to a big blow-out. Up or down? I have no idea. But when it happens - look out.

Given the positive divergences on indicators - I reckon it will be to the upside. And I'm not usually an optimist. :)

Cheers

Red

Gold Etf 19/7/2010

The Gold ETF was down today, -0.63%.

The stock remains in a relatively flat, sideways consolidation. 133/134.6.

That's a fairly tight range for the Gold ETF to be in. A break either way should see some continued action in the direction of the break.

I'm surprised that the Gold ETF isn't showing more decisiveness given today's action on the general stock market.

We'll wait for a more direct message from the market about future direction.

Cheers

Red

market comments 15/7/2010

The XAO was down a bit today -0.5%. But not a lot happened. The XAO chart remains above the 50-Day SMA.

It has pulled back from the 4500 area. The bears will read lots into that.

The indications are that a retracement is in the offing. Whether that will be of major or minor degree is still to be seen.

I think it will be of minor degree. The A/D Ratio was still better than ONE today.

A big down day tomorrow would be significant.

I think we'll probably have a day or two pullback before the next move up.

Let's wait and see what tomorrow brings.

Cheers

Red

Gold ETF 14/7/2010

The ratio chart Gold:XAO seems to be at a key support level.

A break lower will be negative for gold.

This is important since the general stock market as measured by the XAO also seems to be at an important transitional point. Its been going up solidly for a week - next question - can it keep going up.

Cheers

Red

Market Comments 14/7/2010

If the XAO (bottom chart) is going into reverse, one more little move up is about all that would be expected.

• XAO has hit the 50-Day Moving Average and the down trend line from mid-April
• The MACD is still below the Zero line
• The RSI is at 54.8 - I'd expect a top in the market to be about 60 on the RSI if the XAO is to reverse.
• Critical resistance of 4500 is just above the current level of 4477
• The Slow Stochastic is showing a slight negative divergence from price
• The DMI still hasn't crossed over to the positive side.

The Ozzie Dollar (middle chart) has an important fundamental effect on the Australian market. It is now at resistance, and the MACD Histogram is showing a marked negative divergence from price. This may be as high as the Ozzie goes in the short term.

The market is short-term very overbought with the 50-Leaders over the 10-Day Moving Average at a very high level of 92% (top chart). That's a level often seen for a short-term reversal.

So - we might see a bit of upside tomorrow. But that might be it for a couple of days. What happens after that is of the utmost importance.

Cheers

Red

Gold ETF3

Gold was down today, but moved up intra-day.

It may be setting up for another run up. The Slow Stochastic has turned up above its signal line - but not above 20.

There's a strong positive divergence between the MACD Histogram and price.

The 138/140 area is strong horizontal resistance. And the 50-Day SMA is still looming overhead.

We could get a move up here. Let's wait and see how it plays out.

Cheers

Red

Looking at this chart it would be easy to say that the market will probably reverse.

All the balls are lined up. The market was down today, with the 50-Day SMA hovering overhead.

The RSI has reversed at the mid-line. And the Slow Stochastic has turned down below its signal line (but not yet below 80).

So, is there a fly in the ointment?

Maybe. A/D ratio today was 1.1:1 and AdvancingVolume/DecliningVolume Ratio today was 1.5:1.

Are the punters overoptimistic? Betting against a market downturn? In the past breadth has been a better gauge of near term direction than the overall market chart.

So, I think we have to side with the punters and believe that this rally has more legs yet.

Cheers

Red

Gold ETF - 12/7/2010

The Gold ETF had a good day today; but nothing to change the technical picture.

The chart remains below horizontal resistance and below the 50-Day Moving Average.

The MACD is below Zero. The RSI is below the mid-line.

The DMI- is above the DMI+ signalling a weak market; but the ADX indicates a non-trending market.

So - it is possible for Gold to move higher - but at the moment it seems on a slow slide downwards.

Until the technical picture improves considerably, I'll be giving the Gold ETF a wide berth.

Cheers

Redb

Market Comments 12/7/2010

The lower chart is a short term chart of the All Ordinaries Index (XAO). 10-Days, one-hour intervals.

The Index hit the overbought level of 80 today and the MACD is close to crossing negatively. The stock remains above the 13-period Moving Average. The Slow Stochastic has turned down and is now sitting on the mid-line of 50.

It's possible for this market to continue upwards - but the chances lean to the downside - but not necessarily in a dramatic fashion.

The Internals today were quite strong.

The A/D Ratio was 1.5:1 while the AdvancingVolume/DecliningVolume Ratio was even better at 1.9:1.

The Small Ordinaries were up at +0.9% while the 50-Leaders were up just 0.2%.

The 50-Leaders clearly were not all that strong. On the cumulative 20-Day NewHighs/NewLows the sum today was 0. Disappointing on an up-day for the XAO. But not so unexpected when we see the XFL only increased 0.2% - marginal at best.

The market has had a fair run-up over the past three days so a rest is not unexpected.

On the top chart, the 50-Day Moving Average looms just above the most recent candle. So we still might get an up day tomorrow before the market decides what to do.

I'm not expecting anything dramatic in the next day or two.

But ... you never know in the big city. :)

Cheers

Red

Gold ETF - 8/7/2010

That seems unambiguous. The Gold ETF has broken down. It is confirmed by the MACD falling below zero. The daily RSI is below its mid-line.

This confirms the upward movement in the general stock market.

Cheers

Red

Where's the volume 8/7/2010

I dunno - where is it?

Volume got to over 1000Million today - but only just. And that's the lower end of the historical range. Still - I guess that's a big improvement on 716Million just 3 days ago.

Something very odd is going on in the market. It's hard to see how it can mount a bullish challenge on these volumes.

Nonetheless - today's action was impressive. We're back on the slow grind upwards - until we meet oversold again.

In the meantime - expect a couple of days of sideways to down consolidation before the next serious move up.

Cheers

Red

Gold ETF - 7/7/2010

Gold is close to giving a "sell" signal. The daily MACD is still above the Zero line. A break below that would confirm.

On the positive side, the MACD Histogram is showing a positive divergence from the price chart, so there is still some chance that the price of gold will recover.

All these "signals" are all dependent on your reason for buying the stock. This is one of the reasons why I always say - make up your own mind. This is only my view of things.

If, for instance, you've bought the Gold ETF as a hedge against a fall in the Australian market as measured by the XAO - then the Gold ETF is still a way from giving a "sell" signal.

See the top chart. This is a ratio chart of Gold:XAO. Gold is performing better than the XAO according to this chart - so is still performing its function as a "hedge". A signal here would be given under different circumstances, e.g., a break below the recent low. Or a break by the 13DSMA below the 55DSMA.

So - you always have to make your own decisions. The above information might assist - and you may have your own view on things - but it all comes down, in the end, to you making your decision based on your view of the current situation and your goals.

May the financial Gods smile upon you.

Cheers

Red

Market Comments 7/7/2010

The market (XAO) was down 0.51% - volume was up a bit but still under the magical 1000 Million. That's the third day in a row. Outside the Xmas/NewYear period that is very very rare.

The first chart above shows the %change today in major indices and sub-indices. Today was a dog's breakfast, all over the show - with a bias to the down side. Some defensives weren't too bad, but Utilities was one of the worst performers.

Financials had a rush of blood yesterday - but they came back today.

Despite all that - there was some good news in the 50-Leaders. With the number of stocks above the 10-Day MA rising - while the market fell. That's a positive. But not enough.

Until the NetNewHighs/NewLows starts rising (see second chart above), I can't see any reason to buy this market.

Cheers

Red (or should that be Maroon?)

Whooppeeeee

Excuse that little bit of exuberance. ahem.

But - yesterday was my 250th Blog entry.

Yes - I missed it too. So - I'm having a late celebration.

Hopefully it will continue late into the night with the Toads eating the Cockroaches, once again. :)

To the Maroons!!

Gold ETF - 6/7/2010

Not much action for the Gold ETF today. The closing price was the same as yesterday's closing price. The chart continues in a sideways action.

MACD is still above Zero - that's a positive.

The RSI is sitting on 50 - indicative of the indecision in the market.

The Slow Stochastic continues to head down - indicating the loss of momentum. It is getting close to a point where a reversal upwards seems likely - but until it happens, there's no point in pre-empting the market.

Patience is required.

Cheers

Red

Market Comments 6/7/2010

Today is one of those days that a swing trader dreams of. Down early - then up up up all day. The Slow Stochasitc broke above 20, the RSI turned up, the MACD Histogram turned up.

That looks like the start of a sustainable rally.

And I've been expecting such an event. Internal strength in the market has been better than the surface figures have shown. My recent blogs have detailed this.

So - Is there anything amiss with today?

Well - yes, actually.

On such a reversal day, I would expect volume to be strong. Today was up a little on yesterday, but it was not strong. Volume today was 882million. 50-Day Average is 1371million.

Rarely do we have days when the volume is less than 1000million.

Small Ordinaries were up just 0.5% while the general market (XAO) was up 1.2%. That's not showing a return to a risk appetite.

Market strength lay with Financials (+2.1%) and Telecommunications (+2.4%).

The Telecoms have been the best performing sector for some weeks. In recent days it has performed poorly. This looks like a return to strength and its leadership position. Remember - Telecoms are a defensive sector.

Financials have been the second worst performing sector in the market. Is this just a relief rally?

I still think we're in for a few days of up-side action. But the current activity is not conducive to confidence beyond that.

But we'll keep on monitoring this action. This might just be the first faltering steps.

Cheers

Red

Gold ETF - 5/7/2010

There's still no decisive move by the Gold ETF. The RSI is sitting on 50 and the MACD is still above Zero.

It is in a sideways consolidation - so you get weakness on indicators like the Slow Stochastic and the MACD which are momentum indicators.

Volume was also slow on this stock - not as bad as the general market - but not healthy.

S0 - patience - we'll sit and wait.

Cheers

Red

Market Comments 5/7/2010

Never short a slow market.

That's an old stock market adage.

Well, slow markets don't come much slower than today. The volume was the lowest since the Xmas/NewYear period, when sensible people :) are at the beach and recovering from over-indulgence.

The market (XAO) was down 0.3% today. Just noise.

Are there any other reasons not to short this market?

Looking at the Slow Stochastic, it is showing some positive divergence from the XAO chart. Not enough to bet the house on, but worth watching. A move by the Slow Stoch back above 20 would be a short term buy signal.

While the general market was down, the Small Ordinaries were up 0.4%. So there was some risk appetite in evidence.

The Advance/Decline ratio was 0.98, almost par. Not a lot to go on - but enough to say, today was not a day to go short.

The Australian stock market is often sluggish ahead of an American holiday, and then pick up steam, one way or another the day, the Americans return to work. So - watch tomorrow carefully.

Cheers

Red

Gold ETF - 1/7/2010

Another good move up today by the Gold ETF. (A good hedge against falls in the Ozzie stock market.)

This remains on "hold" while it continues to rise against the negative tide of the market.

At this stage, a test of the recent high back in early June appears likely.

Cheers

Red

Market comments 1/30/2010

The market was down today for the eighth day. Probably time for a breather.

The XAO finished at 4263, down -1.43%.

Just looking at the indicators on the chart above, we can see that the Slow Stochastic is still heading up showing a small positive divergence from the price. So - momentum is slowing. Significant positive divergences exist on the Daily RSI and Daily MACD from the price chart. Another pointer to slowing momentum.

The ratio of UpVol/DownVol today was par, 1:1.

The ratio of Advancers/Decliners today was just under par, 0.93:1.

Small Ordinaries Index today was down -1.0%, while the 20-Leaders Index was down -1.7%.

Amongst the S&P Industry Sectors, the three worst performers were:

Information Technology, -2.6%

Telecommunications, -2.1%

Consumer Staples, -2.0%

IT is an inconsequential part of the market. The other two are both defensive sectors.

So, the internals suggest much greater strength than evident in the raw numbers, and some risk taking has come back into the market.

We can't be far off a bottom.

Can a sustainable rally be in the offing without a capitulation day of huge down volume. Dunno. Volume is still light.

Perhaps we're in for a short move up and then a retest of these lows. We might even go below these lows in a capitulation move. But that's all just speculation.

Keep watching the market and the indices for signs of a turn-around. The first one would be a rise of the Slow Stochastic above 20.

Cheers

Red