Market Comments 1/12/2010

Today was another flat day. The market was up just 0.01%. Plus - the market remains above the down trend line.

In the past six trading days, the market has seen three reversal days to the upside. That's unusual.

One reversal day - maybe that doesn't mean much. But three? This looks like Accumulation of the Mucho Mucho Kind. Smart money at work again? Possibly.

Still - let's not pre-empt the market. A break above Monday's high would be, for me, a GO signal in flashing neon lights.

So, what blue chips are on Life Support today?

• Coca Cola Amatil - RSI at 25.9
• NAB - RSI at 29.7
• Wesfarmers - RSI at 29.9
• Woolworths - RSI at 28.4

Think about this. Three out of the four in this group are from the Consumer Staples group (all except NAB). Consumer Staples are usually considered defensive stocks. But we're in a down trend!!! Consumer Staples should be bucking the trend!!! What's going on? Beats me. Unless we're now seeing the end of the down trend and the big money is saying there's no need to be defensive. ... Just a thought.

Blue Chips on the critical list (RSI below 40):

• AGL Energy
• ANZ
• CFX
• CWN
• FGL
• LEI
• OST
• QAN
• STO
• 
  

Stocks that took my eye: not much really. Brambles continues to appeal, and so does Oil Search. Both have performed reasonably well in this current downturn; and show some signs of turning higher. But - Do Your Own Research.

Good Luck

Red

Gold ETF, morning 1/12/2010

The Gold ETF (Gold in Ozzie Dollars tradable on the ASX) is now clearly in an impulsive wave upwards.

If you're on board, there's nothing more to do but enjoy the ride.

I'll use either the 13-Day SMA or the Parabolic SAR as a take-profits marker.

Last night, the Gold ETF got a double whammy. A rise in the price of US$Gold and a fall in the Ozzie Dollar - that provides double leverage for the Gold ETF.

The Gold ETF is currently up about 2% in this morning's market.

Good luck

Red

Market Comments 30/10/2010

Last day of the month. Got your Chrissie Shopping done yet?

Can I hear Santa's Sleigh Bells ringing in the Santa Rally?

Not yet.

That descending triangle looks foreboding - but it can break either way.

Today's action undid a lot of the work done by yesterday's upside reversal.

The good news is - the low of last Wednesday continues to hold. Yesterday's low represents a higher low. All we need now is a higher high to confirm a new up trend. A break below last Wednesday's low would be a big negative.

Looking at the 50-Leaders, today the sector recorded only one new 20-Day New High, That was by Sonic Health Care which has been a great performer in recent days.

The sector recorded five new 20-Day Lows. That continues the slowing in momentum. Last Wednesday the Sector recorded 19 New Lows. But - on an absolute basis - the trend is still down - not going down as fast as it was.

Blue Chip Stocks on Life Support (RSI below 30): Coca Cola Amatil.

Blue Chip Stocks on the Critical List (RSI below 40): AGL Energy, Amcor, ANZ, Crown, Foster's, Leighton's, NAB, One Steel, Qantas, Westpac, Wesfarmers, Woolworths.

Wesfarmers and Woolworths only just missed being put into the Life Support Ward. Their RSIs are hovering above the 30 level.

I can add the 50-Leaders to the Critical List. Today the RSI fell to 39.9. How low can it go?

Prognosis.

The lines in the sand are clear.

A decisive break above yesterday's high of 4710.5 would be bullish.

A decisive break below last Wednesday's low of 4673.2 would be bearish.

4710.5/4673.2 is a narrow range. This should be determined in the next day or two.

I'm keeping a close eye on the weekly Slow Stochastic. It's down now to about 25 - close to the over-sold level. A break above its signal line would be bullish. Until that happens - be cautious.

Most of the above may see somewhat negative. But - as a contrarian - I'm happy with the current state of affairs and am looking for a turn-around in the near future.

As always - patience and discipline are the keys.

Cheers

Red

Apology 30/11/2010

No blog appeared yesterday. I wrote one but apparently I failed to hit the publish button when I finished.

My apologies.

I've been unwell recently with a chest infection and been quite tired. That might explain.

The guts of yesterday's report - mildly positive after a reversal day and the low of last Wednesday still holding.

No stocks from the 50-Leaders were on the life-support list (RSI below 30). Twelve stocks were on the critical list (RSI below 40), that's a high number but much better than 20 which was recorded last Thursday.

Several stocks had good rebounds yesterday. I don't intend to list them now as it is old news (DYOR). But the best of them appeared to me to be Brambles (BXB). Brambles is still in an uptrend and forming an ascending triangle, that's bullish. A break out of the top of the triangle should see further increases in the share price.

Again - my apologies for the absence of yesterday's blog.

Cheers

Red

Gold ETF as at 29/11/2010

The Gold ETF (Gold in Ozzie Dollars) seems to have broken out of its sideways trend of the past three months. It now seems to have established a new higher trading range above $136.

More importantly, the ratio chart of Gold/XAO is now clearly favouring Gold over the broad market. The Gold/XAO is now in a clear uptrend and the 13-Day SMA has now broken above the 55-Day SMA. That's bullish for Gold and bearish for the XAO.

All trends end. But while they last, there's no knowing just how far they will go.

Cheers

Red

Weekly Summary: week ended 26/11/2010

The theme of this week’s report can be summed up:

The market has sold off for three weeks, the retracement may be at an end. But caution is still required.

Despite the weakening of the market over the past three weeks, the medium/long term trend of the market remains positive. That doesn’t mean it can’t change. The market is dynamic. But, at the moment, while the medium/long term is still sound, we can adopt a “buy the dips” policy. But don’t pre-empt the market – wait for the hook-up from the downtrend before entering. This dip is not yet complete.

The Dow Daily Chart has been performing better than the Australian market. If you look just at the chart of the Dow Jones for the past week - you would have no idea that the news media has been crying woe over Ireland and Korea.

The Ozzie Dollar is at a critical support level. Because of the global flows of capital, a positive Australian Dollar is crucial to the inflow of money to the Australian stock market. This is a fundamental that cannot, I believe, be ignored.

Shanghai and Commodities are both looking weak and, like the AUD, are at critical support. Both are fundamental to the health of the Australian market. Further falls would be very negative for our market.

I’d still like to see a switch to the bullish side by the Weekly Slow Stochastic before jumping in with both feet.

The best leading evidence I can find to support future increases in the market is the Cumulative AdvVol/DeclVol Line. No pullback is evident in November. That's an amazing divergence - and prospectively positive.

After some early weakness, I’m expecting next week to finish positive.

Cheers

Red

Gold ETF and the XAO as at 26/11/2010

The lower chart is a ratio chart of Gold/XAO. That's Gold in Ozzie Dollars compared to the All Ordinaries Index. The Gold ETF is currently outperforming the XAO. Since the Gold ETF has an inverse relationship to the XAO of about -0.7 (that's a strong inverse relationship) the outlook for the XAO doesn't look good. The inverse of that, of course, is that the Gold ETF is looking good.

I've been quietly confident that the XAO would turn around after retracement. We've had a significant retracement. And now looks like a logical time for a rebound to occur.

But the Gold ETF is raising doubts about that prognosis.

Am I merely succumbing to the general bearish tone in the market? Maybe.

Yesterday, on the blog, I indicated some concern about the technical picture available for the XAO. Today's action in Gold has intensified that concern.

It's still early days and the XAO while in retreat, looks like it will turn around at these levels. The RSI has broken above its down-trend line and the Slow Stochastic is looking positive. The uptrend line from early September was broken to the downside, then the XAO clawed back up to parity. That's all positive.

But, maybe, greater despondency is needed first, before we get a sizeable rebound.

Monday looks like a crucial day.

We shall see.

Cheers

Red

Market Comments 25/10/2010

Basically another flat day today with the XAO up just +0.22%. Despite a solid night up on the New York Stoch Exchange and the Nasdaq - we had a low volatility day. That often happens when the American markets are going into holiday mode. Our market doesn't seem to want to take any dramatic moves while a hiatus exists in America. Expect some definitive move in Australia next Monday.

Despite the low volatility, the volume today was well above average. That's unusual. It looks like some people were buying up - but the risk averse were selling into any moves higher.

Some bottom feeding was evident today with beaten down stocks like AGK, CFX, GPT and Tabcorp having reasonable rises. FMG (Fortescue) also had a good rise - but I wouldn't describe it as a beaten down stock.

The banking sector attracted a bit of early interest but couldn't go on with it. The RSIs for the four big banks are:

• ANZ - 33.7
• NAB - 25.3
• CBA- 36.7
• Westpac - 31.7

The stocks with the strongest RSI's are:

• AXA (a take-over target)
• ITO (a take-over target)
• Sonic Health - 69.6
• Telstra - 74.5

I've just developed a new ratings system for Sectors within the market. Interestingly, the two strongest sectors and the only ones registering positive are Telecommunications and Health.

Telstra had another stellar day - but I would think it's time for a breather. Probably "buy the dips" time.

On the weekly chart, the Slow Stochastic still shows no sign of turning around. The MACD and RSI are in danger of falling into the bearish category. Much further down in the market and I'll have to say that the intermediate trend is down. But - it hasn't happened yet. And I'm still optimistic that we may have seen the low.

Interestingly, the RSI on the daily chart is within a whisker of breaking above its down trend line. The RSI is often a leading indicator for the market and a break above its down trend line would suggest that the market has turned around. But ... it hasn't happened yet.

Cheers

Red

Stocks of Interest 24-11-2010

The following stocks have shown some extreme movements which make them of interest. (Sounds a bit like that police term, persons of interest.)

Stocks from the 50-Leaders with an RSI below 30:

• ANZ
• Coca Cola Amatil
• NAB

Stocks from the 50-Leaders with an RSI above 70 (not including takeover targets):

• Sonic Health

These can be interpreted two ways - in the case of the top group - avoid at all costs - or maybe, they're due for a sizeable bounce (reversion to the mean).

For the one stock in the lower group - this stock is in a strong up trend - look to buy the dips. Or, maybe, it's gone far enough and is due for a retracement.

(Choose your poison.)

From the Hot Copper forum, one poster noted that ANZ has had 14 red candles in a row, i.e., the stock had closed below its opening price 14 days in a row. That poster had looked back over 30 Years of data and hadn't seen anything quite like it for ANZ. A goodly bounce must be in the offing?

Maybe. I'm reminded of a night at the casino when I saw 19 reds come up in a row at the roulette table. People went broke betting on black after seven reds in a row.

Telstra finally looks like its built a base and is now moving up. It's been a gay deceiver for so long - just be careful. But - if you're wanting dividends for income - there doesn't seem to be much downside for a while.

The IShares Japan Trust (IJP) is also showing signs of life. Be careful as its liquidity is low.

In the interests of disclosure, the only stock I hold in the above lists is Sonic Health Care.

Cheers

Red

Market Comments 24/11/2010

The Australian market today shrugged off the Korean news and finished flat. XAO, -0.08%.

We're starting to get some figures that suggest we're close to a short term bottom. New 20-Day Lows for the 50-Leaders hit 19 today. That's equal to the lowest figures on the 12th August and 6th July. That doesn't mean they can't go lower - the figure on the 1st July was 28. But that signalled the start of the current run from July to November. So if we go lower - we're probably looking at a very strong few months ahead of us.

The Daily RSI on the XAO is now at 40.4 - the lowest it's been since late August.

The Daily Slow Stochastic is kicking up.

The Weekly Slow Stochastic is also getting down to an area where a turnaround can be expected - but there's no sign of it yet.

So - things look promising. But - as they say in the movies - don't fire till you can see the whites of their eyes.

This market can go lower yet.

Cheers

Red

Black Swan morning 24/11/2010

Nassim Taleb's Black Swan flew over markets last night after news of the Korean conflict occurred.

It always seems to happen when the markets are down on their knees.

But - it only delays the inevitable rebound to the upside.

In the meantime, the Gold ETF will be the beneficiary. Gold in Ozzie Dollars was up strongly last night in the U.S., +2.46%.

Swings and roundabouts.

Black Swans come and go.

Cheers

Red

Gold ETF as at 23/11/2010

The Gold ETF bounced nicely off the 50-Day SMA today and now looks likely to head to the top of the current trading range - about 136.

The RSI crossed back above the 50 line and the Slow Stochastic nudged nicely higher.

While all that is good for Gold in Ozzie Dollars, it's not so good for the broad market. The Gold ETF tends to trade inversely to the broad market (XAO).

So - it's swings and roundabouts time. If you're not making money on the swings, hop on the the roundabout (the gold one).

Cheers

Red

Market Comments 23/11/2010

Another solid down day - the XAO -1.16%. The XAO finished at 4676.9.

On the Indicators, the MACD is now below Zero and the RSI is sitting on 40. That's often a level the market reverses at - but I wouldn't bet on it just yet.

Signs of life continue to show on the Slow Stochastic, but we need more strength than that to take this patient off life support.

On the weekly chart, the Slow Stochastic has dropped down to the 30 level - that's lowish - but could go much lower. No sign yet of turning around.

OK. So what's the good news?

New 20-Day Lows on the 50-Leaders has now hit 12. That's the highest this number has been since 25-8-2010. That date marked the low point in the downtrend in August. So, if this is a normal retracement, we're likely to see the market turn around in the next couple of days.

If this is something more than a normal retracement - we could be looking at a lot lower - to test the 4600 area.

Stocks with an RSI below 30 today were:

• ANZ
• NAB
• WOW

Stocks with an RSI below 30 often rebound to the upside. Watch. (No guarantees.)

Stocks with an RSI above 70 today were:

• AXA (under a take-over offer)

So - the odds are tilting a little to the rebound side.

Cheers

Red

Gold ETF as at 22/11/2010

The Gold ETF is in a short term sideways consolidation within the longer term trading range (approx. 130-136). The past four days the stock has been closing just above the 50-Day Average.

Short term support and resistance are approx. 132.9/134.

The current consolidation looks like a bear flag so the probabilities lie to the downside; but this could go either way.

Monday overnight in America, gold priced in Ozzie Dollars was up +0.64%. So the stock will probably open up from Monday's close. But, as we've seen in the past, that can be quickly eroded away as the day wears on.

Cheers

Red

Market Comments 22/11/2010

This market is setting up for a move higher - but you wouldn't think so based on today's action.

The market was up quite strongly in the first hour - and that was it for the day. All down hill from there.

Friday was similar - except it peaked in the first half hour.

This is clearly a battle ground between the bulls and the bears. The bears are currently winning. But no decisive victory. That suggests that the bulls just might have something up their sleeve.

The Slow Stochastic has slipped higher and out of the overbought area.

Before taking action we need to seen a decisive upward break from the down trend line and much more positive action from the MACD.

Checking through the 50-Leaders, I couldn't see anything particularly noteworthy.

Two stocks are above the 70 RSI - AXA and Worley Parsons. AXA is under take-over offers - so that is not surprising - and not meaningful. Worley Parsons has had a great run and is probably due for a retracement. Doesn't have to happen - it could just trend sideways while the overbought condition gets worked off. But - it's worth keeping an eye on.

No stocks are below 30 on the RSI although three are close: ANZ, NAB and WOW. Those are worth keeping an eye on for a reversal to the upside.

Cheers

Red

Market Summary, week ended 19/11/2010

WEEKLY MARKET SUMMARY

We’ve now had two weeks of retracement. Enough? Maybe.

XAO was down this week, -1.28%. On a 20-Day (Monthly) basis, the XAO is flat, -0.04%. The volume was below average on Monday and Friday, that’s common. Volume was above average on Thursday and that corresponded with the biggest down day.

Two out of ten S&P Industry Sectors were up. Health, once again was up, +0.78%. A lot of that rise was due to a positive reaction to the annual report of Sonic Health Care. Telecommunications was up marginally, +0.03%, after Telstra said it would continue to pay good dividends for the next two years. The biggest losers were Energy, -2.75%, and Utilities, -2.57%. The Materials Sector was not far behind with a loss of -2.43%. The export-oriented cyclicals (Materials and Energy) were clearly hurt by fears of a slow-down in the Chinese economy with China pulling on monetary policy to contain inflation.

Risk Aversion returned to the market with Small Ordinaries, -2.34%; 50-Leaders, -1.31%. The China Effect, once again, was probably behind that switch to Risk Aversion.

Gold Miners (XGD) was down, -4.69%. Gold Miners has been erratic for the past eight weeks. In general terms it can be read as follows: pause week, up week, pause week, down week, pause week, up week, pause week, down week. If it follows true to form the next two weeks should be a pause week followed by an up week. If only the market was so predictable! Betting on such patterns is a sure way to go broke.

The XAO finished at 4717.7. That’s well above the August high (4616) and the 150-Day Moving Average (4581). The index finished marginally below the 50-Day Moving Average. The 4600 area still remains the critical support area. If that is broken to the downside, the market would be in serious disarray. At this stage, I still can’t see that happening.

Cheers

Red

IAG and SUN, morning of 19/11/2010

These two stocks show contrasting technical features.

IAG has held above its medium term uptrend line from late August and broken upwards above its recent short term downtrend line. The RSI remains above it s mid-line, and the Slow Stochastic is positive.

SUN has broken below its medium uptrend line from late August and still below its short term down trend line. The RSI is a tick under 50 at 49.6. DMI- is above DMI+ which is negative. The Slow Stochastic has broken back below its signal line which is negative.

On balance, IAG is looking positive and SUN is looking negative.

Last night in America, markets took a big jump upwards. I'm just a tad suspicious. It is options expiry week in America, and such one-off jumps can occur.

I'd like to see how Australia goes today before jumping in at the deep end.

Cheers

Red

Gold ETF as at 18/11/2010

The Gold ETF had an unusual day, with a candle printing an "identical twin" to the previous day's candle. That's often a sign that a trend reversal will occur.

Given that the Slow Stochastic is down in oversold territory the chances of a short term trend reversal are increased.

The market is now at a crucial point.

The Gold ETF and the XAO are at pivot points. Given that these two are inversely related, one or other has to give.

Of course, it is possible for the Gold ETF to rise while the XAO rises - but it is unusual.

Similarly, it is possible for the Gold ETF to fall while the XAO falls - but it is unusual.

Expect a definitive move tomorrow.

Good luck

Red

AMC 18/11/2010

Amcor might have bottomed out at around the 6.50 level.

The SlowStochastic is down in oversold territory .

The MACD is sitting right on the zero line.

If Amcor breaks lower here, it may be going a lot lower.

A bounce tomorrow should see it go back up to the recent high.

Good luck

Red

Market Comments 18/11/10

The XAO had a small rise today, up +0.38%. Most of that was in afternoon trade which is usually positive.

The Slow Stochastic has turned up above its signal line but needs to close above 20.

RSI ticked up but needs to close above its mid-line.

MACD histogram ticked up.

The chart made a new 20-Day Low - that's often an area where an index or stock reverses to the upside.

I need to see better action to be confident that this market will reverse to the upside.

Commentators/bloggers on the market are showing a great deal of fear. Many are predicting that the market has now reversed to the downside. As a contrarian, that gives me confidence that the worst of this downturn may be close to an end. But until I see the indicators turn up and confirm an upturn, I'll sit on the sideline.

Stocks of Interest today were:

IAG: Broke above its short term downtrend line and the MACD Histogram ticked up. The RSI bounced off its mid-line and the Slow Stochastic has a bullish profile.

SHL: The AGM was held today and the market reaction was very positive. The stock was up over +5% on high volume and set a new 20-Day High. The stock is back above the 150-Day Moving Average for the first time since April, 2010. The stock has been in a trading range for about two months and now seems to have broken upwards out of that range. Another day up is needed to confirm. It looks good to me - but that's just my opinion. Do your own research.

Good luck

Red

Selected charts. 17/11/2010

AMCOR

Amcor continues in a short term down trend. Some intra-day buying is coming into the stock (see last two white candles).

Technical indicators:

• MACD remains above zero - but below its signal line indicating short term weakness.
• RSI.14 is below 50. That's a negative. If this stock is to turn around shortly and end the short term weakness, I'd expect the RSI to turn upwards in the 40-50 range - where it is now
• SlowStochastic(5.5) remains in the oversold position below 20. A break above its signal line and the 20 line would suggest the stock has ended the short term down trend

Amcor may be near the end of its short term down trend. Watch carefully.

IAG

IAG is in a similar position to Amcor - in a short term down trend.

Technical Indicators:

• MACD is below its signal line but above Zero. This indicates short term weakness.
• RSI is just above 50 at (51.06). Still above the critical mid-line.
• SlowStochastic(5.5) is above 20 and above its signal line suggesting that the short term weakness may have ended.

The short term trend may have ended but the stock needs to cross above the short term down trend line and the MACD needs to turn up. Watch carefully.

SUNCORP

Suncorp like the other two stocks is in a short term down trend.

Technical Indicators:

• MACD is above Zero but below its signal line indicating a short term down trend.
• RSI now at 48 is below its mid-line.
• SlowStochastic(5.5) is above 20 and above its signal line.

The short-term trend may be ending. SUN still needs to break above its down trend line and for the MACD to turn up. Watch carefully.

Cheers

Red

Gold Etf as at 17/11/2010

The Gold ETF remains within its trading range, 131/136. Positive direction will be provided by a break out of that trading range.

Cheers

Red

Market Comments 17/11/10

The teddy bears had a picnic today. The XAO was down 1.6% on below average volume. The Miners, Energy and Gold were all particularly hit hard today. The Gold Mining sector was down over -3% and Energy was down almost -3%.

The market is getting close to a bottom. Low enough to take a punt on? I wouldn't think so.

Until the Slow Stochastic moves back above its signal line and the 20 level, this market is, to my mind, a stand aside and watch market.

The chart above shows the big down day today. Tomorrow may well be up - as a reaction to the negativity of today.

What happens after that is important.

The market is still above the 20-Day low. It would be nice to see the market drop to that level, and then bounce.

I think we'll see more downside before a reversal up. But that's just speculation on my part. Watch the charts and follow the guidance provided by the indicators.

Cheers

Red

Selected Charts 16/11/2010

The following is offered only as educational discussion and not as investment advice. It represents only my personal opinion and should not be construed as buying or selling advice. You must do your own research. And take full responsibilities for your own actions.

Above are charts for three stocks I've been illustrayinh to people on my email list. I'll take them from top to bottom: SUN, IAG, AMC.

SUN. This stock is looking good.

• Slow Stochastic has risen above its signal line and the 20 level.
• RSI is above 50 and has broken above its down trend line.
• The stock chart has broken above its down trend line.

The MACD still has not broken back above its signal line. If that occurs, SUN becomes a "buy".

IAG is more ambivalent than SUN.

• Slow Stochastic is in oversold territory. A cross above its signal line and above 20 would be positive.
• RSI is above 50 - the dividing line between bull and bear markets
• The stock chart shows three doji candles in the past three days.

The market is undecided. But appears poised to break to the upside. Don't pre-empt the market.

AMCOR

The Slow Stochastic is down in oversold territory so a bounce to the upside is probable. Nothing in the indicators or the stock chart indicates that is actually occurring. Watch for indications of an upturn:

• a cross by the Slow Stochastic above its signal line and above the 20 line
• a swing by the RSI back above the 50 line
• a swing ny the MACD back above its signal line.

Completion of all three would be a "buy" signal.

Good luck

Red

CBA 16/11/2010

Here's an interesting factoid.

CBA has been an albatros about the neck of the general market for some time.

Today, it broke significant down trend indicators. Look at the following:

• MACD broke above its signal line
• RSI broke above 50 - for the first time since late September
• DMI+ broke above DMI-

It's still early days - but that is looking significant from a bell wether stock.

Cheers

Red

Gold Etf as at 16/11/2010

The Gold ETF is back within its trading range, about 130/136. It could be heading back to the 130/131 region.

The top chart shows the ratio of the Gold ETF to the XAO. The Gold ETF has an inverse correlation to the XAO of about -0.7. If the ratio chart goes above the 55-Day MA, that would be a significant positive for Gold, and a significant negative for the XAO. Breaks of this nature are not necessarily major changes in trend. But, major changes in trend have not occurred without such a break. So be wary if the chart breaks above the 55-DSMA.

That chart has been nudging up against the relevant 55-Day SMA for some time. It even, for one day, broke above that Moving Average - but not decisively enough to call it a signal.

We'll continue to monitor this as time goes on.

For the time being, it's a case of close - but no cigar.

Cheers

Red

Market Comments 16/11/10

Today's action was, once again, inconclusive. A flat day with the market (XAO) up just +0.2%. Today and yesterday, the chart candles were "dojis", with the opening and closing price about even. That's typical of an indecisive market.

Looking at the indicators, I see the following:

• the MACD is below its signal line about well above the zero line. That's an indication of temporary weakness. Until the MACD crosses below the Zero line, the bullish tone of the market remains.
• the Relative Strength Index remains above its mid-line. It's been that way since late August. Again, while the RSI remains above 50, the market maintains its bullish tone.
• the Slow Stochastic is now down in "oversold" territory. If it closes above its signal line, and above 20, a "buy" signal will be generated. While the above two indicators remain bullish, any "buy" signal should be taken.

This market may go lower, but it seems to me to be close to a short term bottom.

If a "buy" signal is generated, I'll be taking it.

Cheers

Red

Gold Etf as at 15/11/2010

Not much to say about Gold ETF. It continues in a sideways trend. Today was down a little but not much.

The direction of this stock is determined by two factors - the direction of the Ozzie Dollar and the price of Gold in US$.

If the Ozzie Dollar falls but the price of Gold in US$ rises - that produces a double whammy.

Currently, we're seeing a fall in the Ozzie Dollar (after recent rises) and falls in the US$ price of gold - basically cancelling each other out.

We'll continue to monitor the charts and look to a break out, one way or the other.

Cheers

Red

There's not a lot to say today. An inside day - a day of indecision.

The chart remains above the key 50-Day Moving Average.

The RSI dipped below 50 today. That suggest that the market continued to weaken.

I can't see any convincing evidence that the market won't continue to weaken in the next couple of days.

Cheers

Red

Weekend Quick Review and Comment, 13/11/2010

We finally have the retracement we had to have. Nothing too serious so far – but let’s see where it ends.

XAO was down, -1.93%. On a 20-Day (Monthly) basis, the XAO is up +0.43%. The only day the volume was below average was Monday, a day when volumes are often below average. The only up-day on the market was Thursday – Thursday is often “counter-trend day”.

Nine out of ten S&P Industry Sectors were up. The only “up” sector was Health, +0.42%. The biggest loser was Information Technology, -5.2%, followed by Financials, -3.3%.

Clearly the market is disconcerted by the current brouhaha from both sides of politics about the banks. Queen Joolia is on the world stage playing to the audience back home, shaking her Boadicea sword at the Usurers. By-hook-or-by-crook-I’ll-blow-your-house-down Hockey is doing a great job of blustering at the bricks and mortar in Martin Place.

When the noise and tumult settles, will the big banks continue on their profitable ways regardless of the sabre rattling and the huffing-and-puffing? If they don’t, then it will be another blow to the incomes of self-funded retirees many of whom now depend on the big dividends which flow from the big bank sector for an income. After having incomes decimated by the plunge in the REITs during the GFC, the outlook for retirees, who are generally investment illiterates, is bleak.

Did someone mutter the words, “Unintended Outcomes”?

Cheers

Red

Gold ETF as at 11/11/2010

On Thursday, the Gold ETF nudged above the 20-Day high (see top chart). That's not convincing enough to call a breakout. It did occur, however, after two days of consolidation just below that key level. So it is looking much more positive for the Gold ETF. That, of course, is a negative for the general market as the Gold ETF has an inverse correlation to the XAO of -0.7.

The ratio of Gold/XAO shows a break of the down trend line from early July (see lower chart). Usually a sustained uptrend in Gold can't be sustained unless the chart line manages a break above the 55-Day Moving Average. Once again the chart line is nudging up to that level after a break of the down trend line. That looks promising. A break above the 55-Day Moving Average is not sufficient of itself to give a medium term buy signal, but it is a necessary pre-condition.

I've just checked the price of Gold in Ozzie Dollars and last night it rose in America by 0.82%. Unless there's a set back today in Australia, that now looks like the Gold ETF is on its way upwards.

Good luck,

Red

Disclosure - I have a small position now in the Gold ETF.

Market Comments 11/11/10

Today is the 11th November, 2010. Did you notice how the markets paused at 11.00 a.m. today?e et decorum est

The markets continued on.

The market was strong today, up 0.65% on above average volume. Note, however, that the market bar today was an inside day - a day of indecision. We'll wait on the action in the next couple of days to see how things pan out.

Tonight, in America, the 11th November is a public holiday, known as Veterans Day. The New York Stock Market will be open, but some other financial markets will be closed. Given that it is a public holiday, we can expect that trading will be thin while many market participants are other wise engaged. Tonight's American market won't be much of a guide - but it could be volatile given the thinning volume and the ease with which the market can be moved around. In the end - probably a flat night.

Our market today, despite the up-day, showed many characteristics of an indecisive market.

I have a privately developed ROC indicator for the general market which moved down today from 103.7 to 103.3 in contrast to the up-move today.

The % of the 50-Leaders above the 50-Day Moving Average also moved down today from 54% to 50% - right on the demarcation line between bull and bear market.

The 13-Day Force Index is sitting right on the mid-line 50. (See the top chart above.) The line to look at is the blue line - the 13-Day Moving Average of Force. For several weeks, this line has been going nowhere. This Index shows the balance between buying and selling "forces" in the market. It is currently evenly balanced.

Given the probability of little reliable direction from the U.S. tonight, we might not see a lot of action tomorrow.

But - if the market decides otherwise, the levels to look at on the xao are 4831 and 4767.

Above 4831 - bullish

Below 4767 - bearish

Finally, below is a poem by Wilfred Owen - a moving tribute to people who die in war - a death without dignity.

Owen was an officer in the British army who died in action just seven days before the end of the World War I on the 4th November, 1918.

came out in order to help these boys--directly by

Dulce et Decorum Est Bent double, like old beggars under sacks, Knock-kneed, coughing like hags, we cursed through sludge, Till on the haunting flares we turned our backs, And towards our distant rest began to trudge. Men marched asleep. Many had lost their boots, But limped on, blood-shod. All went lame, all blind; Drunk with fatigue; deaf even to the hoots Of gas-shells dropping softly behind. Gas! GAS! Quick, boys!--An ecstasy of fumbling Fitting the clumsy helmets just in time, But someone still was yelling out and stumbling And flound'ring like a man in fire or lime.-- Dim through the misty panes and thick green light, As under a green sea, I saw him drowning. In all my dreams before my helpless sight He plunges at me, guttering, choking, drowning. If in some smothering dreams, you too could pace Behind the wagon that we flung him in, And watch the white eyes writhing in his face, His hanging face, like a devil's sick of sin, If you could hear, at every jolt, the blood Come gargling from the froth-corrupted lungs Bitter as the cud Of vile, incurable sores on innocent tongues,-- My friend, you would not tell with such high zest To children ardent for some desperate glory, The old Lie: Dulce et decorum est Pro patria mori. Wilfred Owen

Gold ETF as at 10/11/2010

The Gold ETF is at the top of its trading range. Today's action was a small doji inside the range of the previous day. This denotes indecision by the trading community.

Tomorrow's action could be crucial for near term direction.

The Gold/XAO Ratio chart shows the chart breaking above the down trend line. A break above the 55-Day Moving Average and a move up by the stock chart would suggest further upward movement.

That would be negative for the broad Australian market which tends to move inversely to the Gold ETF.

This is still in a sideways trend - but could change in the next couple of days.

Cheers

Red

Rant Time

There's some crap on the internet. (Some good stuff too - like this blog.:))

Just have a look at this one:

http://inflation.us/about.html

Put up by the National Inflation Association.

The by-line: Preparing Americans for Hyper-Inflation.

Who are they? No idea.

No names given. No addresses given.

The statements on this web-site have to be seen to be believed. But I'm sure many do believe them.

Get this one, for example:

"For many decades, most American students went to college to get a job on Wall Street."

What? Those Liberal Arts students? Those med students? Those engineers? Those computer nerds? Those Science students? Those education students? Those ag-science students? Those geology students?

Most of them were wanting jobs on Wall Street?

What balderdash.

Then they get down to something that might be a bit more specific:

"During the months of September and October alone, just in anticipation of the Federal Reserve’s quantitative easing announcement, cotton prices rose by 54%, corn prices rose by 29%, soybean prices rose by 22%, orange juice prices rose by 17%, and sugar prices rose by 51%. Wheat prices are also up 36% since the beginning of July. Despite these huge increases in commodity prices, according to the U.S. Bureau of Labor and Statistics (BLS)’s consumer price index (CPI), food prices only rose 0.3% in September. (The BLS’s October CPI report will be released on November 17th.)"

The reason the price of agricultural products is rising in America has to do with a drought in the mid-West. Yes - a drought. The supply of ag-products is being severely reduced by a drought. Nothing to do with an anticipation of the Fed's QE2 announcement. Unless, somehow, an anticipation of QE2 can somehow reduce the amount of rain falling in the mid-West.

Just more balderdash.

I could go on and on and on.

But what's the point?

This is the sort of rubbish that is being spread over and over and over again about the Fed's QE2.

Any first year economics student who wrote this sort of balderdash would be quickly given a fail and given counselling to suggest other career options.

But - the unknown instigators of this sort of rubbish must have ulterior motives. I wonder what they could be? hmmmm? I'll leave that to your imaginations.

Cheers

Red

market Comments 10/11/10

The general market today measured by the XJO (ASX200) was down 0.87%. The volume was below average. Given that the middle of the week tends to have a higher volume, that must put today's drop in the suspect category.

The above chart shows the XJO on an hourly basis with an overlay of the Slow Stochastic.

The Slow Stochastic is at an extreme low (oversold) level.

The Index is also at a support level.

I'm expecting a bounce tomorrow - but it may not be of great significance before another down move occurs.

If this scenario plays out as I expect, we might then be looking at a significant buying level.

But that is just a scenario. Let's see how it plays out and the charts can tell us what to do.

At the moment, I wouldn't be going short this market.

Good luck

Red

Gold ETF as at 9/11/2010

The Gold ETF is now at the top of its recent trading range. A break higher here would be bullish. Mean Reversion traders will be looking for a fall back.

Looking at a longer term chart. The stock has now broken above the down trend line from early July.

That's an early warning sign that the trend might have changed to the upside.

It still needs to break above horizontal resistance to confirm a change in trend to the upside - and a negative for the general stock market.

Cheers

Red