The above chart is for the XJO (AUS 200). I usually show the XAO but there is little difference between the two charts.Today was obviously a non-event, despite the much vaunted RBA decision. Despite the fact that expectations by economists were almost universally for a "no-decision day", the RBA decided to lift rates. But apart from a bit of a flurry around decision time nothing much changed on the day. There was a bit of movement out of Materials and into Financials, but nothing of a lot of significance.
Today's action is marked by a small star at the far right of the chart. A narrow range day, where the Index opened and closed virtually unchanged. That's indicative of indecision.
Clearly the market is waiting for some news which it can react to in a positive manner. Either or both the American election and the Federal Reserve's statement on Quantitative Easing seem to fit the bill. Later in the week, the American market will be watching the jobs numbers.
You don't have to be a genius to see that the Australian market is in non-trending mode and has been that way since the beginning of October - albeit with a slight upward bias.
Note how often the XJO has knocked up against the 4700 area.
Sideways trends always give way eventually to big movements. A significant move above 4700-4710 should see plenty of upside. A break below the uptrend line and then the 4550 area should see plenty of downside. The XJO bounced twice off the 4550 area in mid-October, so that may provide solid support to any downside movement.
By the way - I read that Macquarie Bank ran its quants methodology over the Melbourne Cup field and came up with the three place getters. Maybe we'll see MacBank opening a betting shop? Or maybe their quants will leave MacBank in droves and become professional punters. Ahhh - but that's what they are now. Just a different casino. :)
Good luck
Red
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