The Australian stock market had a “rest” week and the Monthly and Weekly Charts are bullish
The above analysis highlights a large number of warning signs that the market could turn down. Almost all indicators are alerting to a possible downtrend.
A simple medium term indicator for future direction is the Weekly Slow Stochastic. It is bearish. A break of the uptrend line from the beginning of October should see a test of the 4600 area. That is good support.
I’m expecting this week to be negative.
Much of the indicator weakness may be a result of uncertainty about coming events in America: mid-term elections and the FOMC meeting on Wednesday.
A significant win by the Republicans on Tuesday has probably been priced into the market. So, if they win, it will probably be a non-event for the markets. If the Democrats don’t lose control of both houses, then we can expect a sell-off in the stock markets.
The FOMC meeting has been the subject of much speculation.
- “QE2 will be less than anticipated.”
- “No it won’t. QE2 will be just like we were anticipating.”
And so the speculation goes on. If the first guess proves correct, the US$ should rise and markets should drop. You can work out the second one for yourself.
In the meantime, earnings season progresses with most stocks surpassing expectations.
Next week, several factors look like coming into play: election results, FOMC decision, earnings results. It’s impossible to predict how these will impact the markets.
Meanwhile Obama seems to be playing up the terrorist threat to America. Nothing like a good old external threat to the nation to bolster support for the incumbents. Is that good for the market? I wouldn’t think so.
Next week looks like being critical for short-term direction.
Expect surprises. (Particularly in Melbourne.):)
No comments:
Post a Comment