The market's response to the federal election has so far been muted. Today was down about 1% on the XAO. That looks more like a move down in concert with the American market last night and the Japanese and Hong Kong markets today which were both down over 1%.Looking at SHL today, one of the key stocks to be affected by a change in government, it was again up strongly today. It is now on the verge of a breakout.
TLS is the other key stock to look at. It's situation is complicated by the fact that it went ex-dividend yesterday. However, it's fall yesterday was more than can be attributed to the ex-dividend date. Today it recovered some ground. Strong stocks going ex-dividend often recover the loss ground very quickly. It's still early days - but unless a strong upmove occurs in TLS, then I think we can attribute the weakness to a perception in the market that that coalition will win out in the long run. SHL seems to be suggesting that.
The very general indicators I use gave a "sell" signal on the XAO.
- MACD below Zero
- RSI below the mid-line
- W%R below the mid-line.
These signals must have some discretionary scrutiny applied to them. Unless the stock/index also breaks below an important support level, the signal should be ignored.
The important horizontal level which must be broken is the 4400 level.
If that is broken to the downside, then I think we can expect a test of the July lows.
Most technical factors are pointing to further decline. But until 4400 is broken, I think I'll stay on the sidelines.
Cheers
Red
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