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
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