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
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