Welcome to Whip Saw City. One day you're up, euphoria, wait a couple of days, you're down, depression.The current trend has a slight upward bias with increasing range expansion. Not a good sign. It often signals a top.
Today's action did a lot of technical damage.
I try to keep these daily blog entries short and pithy. So I try to pick a chart (an unusual one not readily available) to illustrate a point. I'll have a few more charts than normal today.
So - to illustrate the technical damage issue, I've put up a chart of Net 20-Day NewHighs/NewLows for the 50-Leaders.
The chart has broken below an up-trend line in existence since July 2010. That's a significant negative development.
The top chart is a chart I had in my weekly email report. It shows that the Australian market (XAO) tends to follow a four-monthly trend from low to low.
If the chart follows this cyclic trend, then the next couple of weeks could be rugged. There's no way of knowing just where it will finish - but there's good support down below at around the 4600 mark. If we get down to that and bounce, then we'll probably look forward to a good few months of upward movement.
If the market gets down below that, all bets are off.
Cheers
Red
:)
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