I don't often show weekly charts on the blog, which is meant as an update to my more comprehensive weekly report sent out by email.However, since we had a bit of a lull today with the market up just a bit, I thought it worthwhile to show the weekly state of affairs.
The lower chart shows the XAO is in a nice uptrend and currently hugging the top of the channel. The market seems to have good support now from the 30-Week Moving Average (equal to the 150-Day MA). While the market remains above that benchmark, we must presume the bull is back with us.
The StochRSI.30 has plenty of room to move up before it hits the overbought level of 0.8 and if history is any guide, it can stay above that level for a couple of weeks before falling.
The RSI.4 is showing some signs of overheating being above 70 so we might have a bit more consolidation before any serious move upwards occurs.
I still feel uneasy about this market and the top chart shows why. Again this is a weekly chart but shows the Slow Stochastic. It's been up in the overbought region now for four weeks. That's starting to get a big long in the tooth. How much longer it can stay up there before suffering a serious fall-back is anybody's guess.
That indicator continues to make me a bit cautious. I'd like to say that this market is now heading much much higher. It's had a good period of consolidation which has laid the ground work for further upward movement.
But if that occurs - then the XAO will break upwards out of that channel and the Slow Stochastic will stay in the overbought reading for even longer.
That seems to me to be doubtful at this stage.
But - the market can do anything it likes.
If the XAO does break out above the current channel - then we're in the throes of a very bullish market. Given that we're now well into October, that may be possible.
The market seems destined now to go higher in the medium term, baring some sort of cataclysmic event - e.g., Terror Attacks in Europe, devastating hurricane in the Gulf of Mexico, or any other fearful thing you can think of.
When the bull starts rampaging - it will take something like that to stop it.
Cheers
Red
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