Market Comments 31/12/2010

The market (XAO) was down 0.81% today. The after market action accounted for about half of that. The above chart is of the 50-Leaders which was down over 1%.

Taking the indicators at face value, this market is now in trouble. The MACD has crossed below its signal line. The RSI is below 50. The DMI- has crossed above the DMI+and the ADX has changed direction. Up-trend line broken to the downside. All suggests a new down trend.

The 50-Leaders ended just below the intra-day low set on Wednesday. But it was a marginal break. So that might give the bulls some hope.

Of more significance is the configuration of today's bar. It finished down at the lows of the day. Such events, especially on low volume, are often suspect. We only have to look back at the bar from eight days ago to see what a gay deceiver it can be. Today's bar is an almost carbon copy of that day which turned around and reversed the next day.

So we need to see what happens when the market reopens in the New Year to see if today's action is as bearish as it first seems.

Happy New Year

And good luck for 2011

Red

Market Comments 30/12/2010

The market as measured by the broad XAO was up a bit today +0.31%. Volume was the lowest for the Festive Season. So you can forget about any significance in today's trading.

The market is still trending sideways.

I'm really struggling to find anything meaningful to say about today. So - maybe it's better that I just leave it at that.

The Cleaning Man at Comsec was not left to write the Comsec "reasons" for market movements today - so they do have a semblance of coherence and intelligence. Do they help us with our trading investments? NO. :)

Tomorrow the market has an early closing. It might be better if we all shut up shop now and enjoy a well-earned long week-end. (Have a good one.)

I'll still be back over the weekend - giving a brief run down. But don't expect anything startling.

Cheers

Red

CUK (Classic of the Unbelievable Kind)

Here's an update on CUKs.

I mentioned earlier tonight that one reason given for the fall of BHP and Rio today was because there was "no lead" from the London Metal Exchange.

This was a CUK.

Now, tonight. On the ABC, the reason for the fall in the big miners - the Queensland Floods.

Yep - there you have it folks. Don't believe Comsec. Believe the ABC. It was the Queensland Floods.

These huge multinational companies with operations in every continent in the world, and many countries you haven't even heard of, dropped over 1% today because of the Queensland Floods.

Another CUK.

Good luck

Red

Market Comments 29/12/2010

The market was basically flat. The results for the two major indices were: XAO +0.07%,

XJO -0.04%. Indicators (MACD, RSI, Slow Stochastic) are rolling over or turned negative.

The market today was stronger than those results appear. A dampener was placed on upward movement by substantial falls in BHP and Rio (see chart of BHP above).

Why did the big miners fall? Well, according to Comsec, because there was no lead from the London Metals Exchange which is still closed for the Xmas break. huh? The big miners fell substantially because there was no lead? Shouldn't they have been flat with no lead?

Those who know me well, know that I often disparage the "reasons" given out as to why the market did this or that. But this one - "no lead" - is a CUK (Classic of the Unbelievable Kind).

Surely they could have come up with a better one than that, like, maybe, "The big miners fell over concerns that the Chinese economy may slow after another official lift in interest rates."

Maybe the only person left at the end of the day to write up the Comsec daily report was the cleaning man?

Ooops. I'm back. I was off with the cleaning man there for a while. Let's get back to the market.

As I was saying, the market was a bit better than first appears.

• Small Ordinaries was up +1.1%.
• UpVolume/DownVolume ratio was 2.65:1. That's strong.

On the negative side, the best performing S&P Indices were Health +0.6% and Utilities +0.6%. Both of these sectors are defensive sectors. Possibly a flight from the big miners to relative safety.

Here are the volume statistics from last year for the Xmas Period:

21/12/09			921,350,449
22/12/09			755,348,561
23/12/09			691,908,713
24/12/09			433,666,288
29/12/09			644,286,939
30/12/09			475,488,336
31/12/09			275,405,884

Here are the volume stats so far for this year:

21/12/10			1,117,699,386
22/12/10			909,237,851
23/12/10			918,219,132
24/12/10			748,957,638
29/12/10			810,439,567

You can see that the market volumes are much higher this year than last year. And the market is not going up. Last year, the market rose more than 4% from 21/12/2009 to 29/12/2009.

There's a lot more "effort" this year, for no result. This looks like distribution to me.

But - I could be wrong. Until the chart actually falls, there's no point in pre-empting the market. You could be giving up further substantial rises.

Well - that's just my opinion. You might have a different one.

I'll leave you to make up your own mind.

Good luck

Red

Gold ETF, morning 29/12/2010

Gold in Ozzie Dollars was up strongly overnight, +1.1%.

In absolute terms, the Gold ETF is trading close to the bottom of its range. (Top chart) Relative to the XAO, the Gold/XAO Ratio is close to support.

Tehnical Analysis Details:

• Stock is below the 13-Day SMA
• MACD Histogram - Negative
• RSI - below 50 - Negative
• Slow Stochastic (5,5) - 32.8, below its signal line - Negative

The TA Summary is negative - but it wouldn't take much to throw the switch to Positive on all details. Given that Gold is at support and last night's positive action, today could be the start of a new short-term uptrend.

Good luck

Lance

Week-end Summary. as at 24/12/2010

The markets generally are in solid uptrends. Plenty of warning signs suggest that a short term correction is due. The Yield Curve provides no evidence that a bear market lies in the future.

My medium term sell signals for the STW (tracking stock for the XJO) were triggered on Thursday when the stock went ex-dividend. That sell signal should be viewed advisedly. Carry through selling on Wednesday would confirm.

While Governments around the world are determined to ward off deflation, maintain financial stability, and provide the liquidity needed for economic expansion, a major stock market correction is unlikely.

The longer term, risks lie to the upside, particularly in commodity prices.

That's just my opinion. You might have a different one.

Remember, anybody who thinks they're going to be a millionaire by investing in the stock market has rocks in their head. :)

Cheers

Red

Market Comments Xmas Eve

Yesterday, the XJO closed almost exactly at the early November closing high.

Today the market fell away and crossed marginally below the uptrend line from early December.

Giving the seasonal difficulties with low volume (early market closing time today) it's difficult to know how serious this fall back is.

However, let's try to over come the seasonal difficulties by upgrading today's volume pro-rata.

Doing that we get a figure of about 1125 Million shares traded. That's a little bit below average. Given that many traders have already gone away on holidays, the volume today was probably significant.

If today's fall was just a test of the trend line, with rises to come, I'd expect low volume on such a test. That seems not to have occurred.

The real test comes on the next day's trading - if there is further selling on significant volume, I think it's All Over Red Rover.

The RSI has marginally fallen below its uptrend line.

The Slow Stochastic hit the overbought level of 80 and fell away. It still has to fall below its signal line.

No major technical damage is done, however, until the XJO falls below the last major low - at4737.

So - over the Xmas period we're left in limbo.

Just forget the markets and enjoy yourself.

Merry Xmas

Lance

Market Comments 23/12/2010

You just have to love the stock market.

The early November highest close on the ASX 200 (XJO) was 4800.6. The closing high today was 4799.0. The XJO tried valiantly today to close at a new high - but just fell back under the bench mark right at the end of trading.

I can't read anything into that but bearish sentiment.

Some of the boyos tried to make it close higher. But others dropped it back in the last hour of trade.

Who represented the "smart money" - I'd be betting on the people who engineered the sell-off in the last hour of trade.

That sell-off suggests to me that a bearish sentiment is lurking in the background of the market.

The three big East Asian markets were all down today. Japan, -0.23%; Hang Seng, 0.62%; Singapore, 0.21%. Sentiment and volume is less affected by the seasonal influences of the Festive Season and may have an moderating effect on sentiment in the Western markets

If tomorrow is down - that would confirm the thesis. We shall see.

Now - to the health of individual patients.

Stocks on Life Support (RSI below 30): None.

(I think the nursing staff is doing everything possible to get them all home for Xmas.)

Stocks on the Critical List (RSI above 30 but below 40):

Leighton, Mirvac, Qantas, Stockland, Suncorp Metway, Toll Holdings.

Stocks looking buff - working out in the Gym. (RSI between 60-70):

BHP, Brambles, Commonwealth Bank, Computer Share, GPT, Insurance Australia, Macquarie, Origin Energy, Oil Search, QBE Insurance, Santos.

Stocks on Steroids. (RSI above 70 - ignoring stocks boosted by a takeover offer):

Bluescope, Lend Lease.

I'll try to get something out tomorrow on the market - Xmas Eve. (I'm waiting with bated breath for tomorrow to see what the boyos can do with a shortened trading day and low liquidity.)

Given the news just in on Ireland (bank taken over by the government), and Hungary (credit rating downgraded by Fitch), there's sure to be a negative reaction in the American futures market. Whether or not it will be just a knee jerk reaction, or a reason to provoke a sell-off is still to be seen. Maybe the American market will just shrug it off after a short-lived downward movement.

Best of luck - enjoy the Festive Season

Red

Market Comments 22/12/2010

The market index ASX200 (XJO) remains within the "zone".

RSI and Slow Stochastic are showing negatively against the Index.

Simple really. A break above the current level of resistance would be a Santa buy signal.

A break below 4737 (the recent low) would be a sell signal. The XJO is currently at 4778.

Probably another reliable guide would be a break by the Index below the 13-Day Moving Average.

It ain't broken yet.

Cheers

Red

Market Comments 21/12/2010

The gneral market (XAO) recovered its losses of yesterday plus a bit extra. Volume was reasonable.

The Index is now back in the "zone" - that area at the top of the market in early November.

The Index continues to respect the 13-Day Moving Average. That looks like being a key. A break below that would probably be a death knell.

Yesterday's move was pessimistic. If it had been down 1% on high volume, I would have said that the market was in for a retracement. But it was only down 0.5% on low volume. If a retracement was on the cards, follow through selling needed to occur today. It didn't happen.

Interestingly, the Slow Stochastic didn't recover today. It might tomorrow, or it might not. At this stage that's a big negative for this market.

Event stocks today. I've got two. (Yesterday Santos was an obvious - but the media was all over that one.)

Here's two to look at - for totally different reasons. (Note - I only talk about the big blue chips in this section. Penny dreadfuls are for others to talk about.)

First, IAG.

Up +3.6%. A new 20-Day high. Volume highest since early November. Wide range day. Range was 19 Cents. Stock closed at 3.90, up 14 cents on the day. A good day's work for the punters.

Next, TOL.

Down -0.17%. New 20-Day low. Lowest price since August. Narrow range day. Range was six cents. Stock closed at 5.82, down just one cent on the day.

So, it is clear why IAG is an "event" stock, up strongly on good volume.

But TOL? Down just a bit on big volume.

The key is the position of the stock in the trend. TOL has been in a long down trend.

Now, we find a narrow range day on high volume (highest since late October when it fell heavily).

Think about the psychology of this. It looks like some people were selling this stock furiously, while others were buying it furiously. The range ended up narrow and the stock price hardly budged.

Who was buying? Smart money?

Who was selling? Dumb money?

I'll leave that with you.

I think both are worth watching in the near term.

Good luck

Red

Market Comments 20/12/2010

Down - but not out.

The Slow Stochastic has crossed below its 80 level. Further selling in the short term seems likely.

The Index remains above the 13-Day MA and the MACD still hasn't crossed to the down side. The chart remains above the crucial 4800 level.

If the index breaks below those benchmarks, then this may be more than a short term consolidation and morph into a major retracement.

Seasonality favours further upside.

We shall see.

Good luck

Red

Gold ETF 20/12/2010

As you know, I'm keen about the Gold ETF (ASX) as a hedge against falls in the broad Australian stock market and/or as a counter trend play to the broad market.

As of Friday's trading in Australia, the Gold ETF is at a key support level.

On Friday night (America), Gold measured in Ozzie Dollars had a good rise.

Given the confluence of indicators, a bounce here is positive for the Gold ETF and negative for the broad market.

Cheers

Red

Week-end Summary. as at 17/12/2010

Let’s look at the positives – the markets generally are in strong uptrends. And until those uptrends turn down, that’s the place to be. The long term (monthly) and medium term (weekly) charts are quite positive. The Advance/Decline Line is positive.

The daily XAO looks shaky with some technical indicators already going negative.

The Ozzie Dollar is looking weak – a strong Ozzie is necessary for the liquidity to sustain a bullish stock market.

Shanghai and Tokyo are showing some near-term weakness. Japan has been in a strong uptrend and that has not obviously broken to the down side, but some indicators suggest it will.

The coming week leading into Christmas has a mild positive seasonal bias. After Christmas and into New Year is seasonally strong.

The market may be able to hold on to its seasonal upside bias until the New Year. And the boyos in the prop trading desks will have their champers.

I’m not so sure about January. And the more I look at the daily charts and indicators, I’m not so sure about Christmas.

Don’t pre-empt the markets.

Cheers

Red

Morning Comments. 17 December 2010

My apologies for the lack of a blog last night. I wasn't well and didn't get round to it.

No harm done. The market continues on its slow, weary way upwards.

The close yesterday is bracketed by the closes on the 7/8 November, which marked the early November high.

The RSI.2 remains extremely overbought.

Slow Stochastic (5.5) also remains extremely overbought, and has been since early December.

A fall by the Slow Stochastic below 80 would trigger a short term sell signal.

Markets can stay "overbought" for extended periods of time. But this one is looking very long in the tooth.

That doesn't mean that a major retracement is in the offing (although it could be). But a few days of weakness would be healthy if this market is to maintain a bullish tone.

Otherwise, we may be looking at a climactic buying session which would surely end this bull rally for more than a few days.

At this stage, such a possibility does not look likely.

Remember, tonight in America is "triple witching" for Options. That often results in dramatic movements - usually to the upside.

Cheers

Red

Morning Comments. 16 December 2010

A short time ago I mentioned in the blog how the RSI.2 can signal a short term overbought status on the XAO. When these occur we can expect a day or two of retracement - or, it can be the start of something bigger such as early November. Of additional concern is the negative divergence on the CCI.14 and the break below 100.

Of additional concern is the status of the Slow Stochastic (5,5). This indicator has been up in the "overbought" zone (above 80) since early December. It has now broken below its signal line. A break below 80 would probably suggest a few days of downward movement.

4800 could act as support. If the XAO bounces there, the Santa Rally might be "on". A break below 4800 and we may have to wait a longer period of time to fill the Xmas socks.

Cheers

Red

Market Comments 15/12/2010

The XAO was up +0.05% today. And the market continues to inch toward the early November high. The market actually closed higher today than the close on 8th November.

Of interest today was the presence of risk appetite.

The Small Ordinaries was up +0.7%, while the 50-Leaders was down -0.1%. The UpVol/DownVol Ratio was 1.7. Given that today was a flat day, these readings are very healthy. It means that any weakness in the market today was due to the negative sentiment towards a small number of Blue Chips and not towards the overall market.

The Gold ETF was down solidly today, -0.52%. This weakness underscores the strong breadth in the general market.

Stocks on Life Support (RSI under 30): Fosters.

Stocks on the Critical List (RSI between 30-39.9): AGL Energy, Coca Cola Amatil, Crown, Suncorp, Tabcorp, Wesfarmers.

Stocks looking Buff (RSI between 60-69.9): BHP, Computer Share, CSL, FMG, Macquarie Group, Oil Search, QBE Insurance, Westpac, Worley Parsons

Stocks on Steroids (RSI 70 or above): Bluescope, Origin Energy.

Nothing in particular should be read into the above lists. Just stocks to keep an eye on.

If a "steroid" stock drops on high volume - short term traders might like to take profits.

If a Life Support stock rises on heavy volume - maybe it's time to dabble a little on further rises.

Those are a couple of simple "set-up" warning signals. No guarantee that money can be made. No such thing exists in the stock market.

Looking at the Slow Stochastic. It's been stubbornly up in the "overbought" range since 3rd December. A break below 80 I would consider a short-term "sell" signal.

Cut losses short, let profits run.

Good luck

Red

Morning Comments, 15 Dec, 2010

U.S market up? The Dow Jones Industrial Index (30 blue chip industrial stocks) was up 0.42%.

However, any measure of the broad market was flat.

NYSE Composite Index: +0.07%
Nasdaq Composite Index: 0.11%
S&P 500 Index: +0.09%

Whenever the "market" shows a major divergence like this between the Dow and the broad market - it is flashing a warning sign that all is not well.

On the plus side - the Ozzie Dollar was up 0.35% and almost hit parity with the US$ - 99.95. A rising Ozzie Dollar is good for the Australian stock market as it improves liquidity in the nation's money supply, i.e., there's more money sloshing around so some of it will find its way into the stock market.

On the negative side, although the S&P500 was only up marginally, it was the sixth day in a row up. Odds are increasing that it will settle back for a day or two.

Tea Leaf reading is a dangerous sport. Undertake such activities at your own risk.

Good luck

Red

How's the patient doing? 14/12/2010

The following lists ignore stocks under take-over offers.

50-Leader Stocks on Life Support (RSI below 30): Nil

50-Leader Stocks on the Critical List (RSI below 40, but above 30):

AGL Energy, Coca Cola Amatil, Crown, Fosters, Tabcorp, Wesfarmers, Woolworths.

50-Leader Stocks looking Buff (RSI above 60, but below 70):

ANZ, BHP, Bluescope Steel, Commonwealth Bank, CSL, Fortescue, Origin Energy, Rio Tinto, Westpac, Worley Parsons.

50-Leader Stocks on Steroids (RSI above 70):

Computer Share, Lend Lease, QBE Insurance.

Nothing particular should be inferred from these ratings. Oversold can get more oversold. Overbought can get more overbought. But savage reversals, up or down, on high volume should be taken as signals to sell out, or buy in, as the case may be.

Well - that's my opinion. You might have a different one.

Good luck

Red

Special Interest Stocks 14/12/2010

AGL was hammered today, down 4.92%. More importantly, it finished at the low for the day. So smart money wasn't interested in buying into this stock.

Looking at the stock (big drop down on high volume, close at low of the day), I would think it will be some time (weeks?) before this stock can recover. I might be wrong. For AGK stock holders, I hope so.

The stock is now close to an important support level (around $15). If it drops below that, I would think further significant drops in price will occur.

Why did AGL fall? Here's their announcement to the market before it opened this morning:

AGL Energy Limited (“AGL”) confirms that it has not acquired any assets in the New South Wales government’s sale process for its energy retail businesses and electricity gentrader contracts.

AGL has consistently stated throughout the sale process that it would benchmark any bids for assets against the alternative of pursuing a strategy of organic growth given the strength of the AGL business in New South Wales. AGL has also said it would only bid for assets at prices that achieved the required returns for shareholders. AGL’s bids for assets were at prices consistent with this principle.

AGL already has a strong market presence in New South Wales with more than 1.1 million customer accounts. AGL now intends to pursue the alternative strategy of leveraging its market position, its strong brand and its operational platform to drive organic customer growth in New South Wales and deliver a superior outcome for its shareholders.

Plans are also well advanced for the construction of new gas fired electricity generation plant in New South Wales.

Costs of approximately $13 million incurred during the bid process will be included as a significant item in the FY2011 interim results.

Market Comments 14/12/2010

This morning I put up a few charts from last night's American market, and concluded that the Ozzie Market might be down today. Well - that was a miss - but the XAO certainly wasn't strong today, up +0.2%. Today's trading resulted in a narrow range bar inside the range of yesterday's bar.

That denotes a day of indecision.

Perhaps of more importance is the volume indicator for today. I often say that volume on Monday and Friday are lower than average, while the middle days of the week are higher.

Well, today, the volume was well down on the average. Smart money was not interested in this market today.

That doesn't mean the market will fall. It's a warning. Look to the action tomorrow for direction as to a decisive move. If the market action tomorrow is on above average volume, then the direction of tomorrow's move should be decisive for the next few days.

The early November high still shines like a beacon and the trend remains up.

Let's see what tomorrow brings.

Good luck

Red

Lessons from Madoff

Usually I restrict this blog to pure technical analysis of the markets. But I thought the following is worth sharing.

I particularly compared the Madoff victims to the Storm Financial victims - and how they could have avoided being victims.

Of course, these events occur time and time again. And people are caught time and time again. But, if the following saves just one person from becoming a victim, then it's been worth passing it on.

http://www.ritholtz.com/blog/

Good luck

Red

Overnight Markets: morning comments 14 December

Last night, the Dow Jones marginally exceeded the early November high (resistance) and then fell away in the last hour to be up marginally on the day's trading.

Both the Nasdaq (NDX) and the Small Caps exhibit a classic "waterfall pattern". (Sideways and then falling off a cliff.)

Nasdaq down -0.36%

Small Caps down -0.61%

I'll be surprised if our market (Ozzie) is up today.

Good luck

Red

Market Comments 13/12/2010

The XAO was up today, +0.23%. Not much, but it was up.

The XAO seems to be drawn magnetically to the early November high. Today it got within 26 points and then fell away.

Financials were up a bit more than the general market; XXJ was up 0.9%. The banking sector rose - probably with some relief that Swannie hadn't hit them with more than a feather duster. As Walter Kerr once said, He had delusions of adequacy.

Nikkei was up today, 0.8%. Hong Kong was up, 0.67%. As I write, the FTSE is up, 0.82%.

In primary school I learnt the following poem by Robert Browning:

Pippa's Song

THE year 's at the spring,
And day 's at the morn;
Morning 's at seven;
The hill-side 's dew-pearl'd;
The lark 's on the wing;
The snail 's on the thorn;
God 's in His heaven—
All 's right with the world!

Somehow, I should be able to rewrite that verse with a reference to POMO.

Let's see what tomorrow brings. Currently, the trend is up. And Santa's coming.

Cheers

Red

Weekly Sector Analysis, week ended 10/12/2010

The above chart represents a system I’ve developed for rating the various sectors and significant sub-sectors in the Australian market. It combines traditional ratio analysis and a 20-Day Rate of Change.

The three highest rated S&P Sectors are Materials, Health and Energy. A suggestion is to buy strong blue chip stocks in these sectors on any pull-back.

Blue Chip Stocks with an RSI currently above 60 in each of these three sectors are:

Materials: BHP, Bluescope Steel, Rio Tinto

Health: CSL, Sonic Health Care

Energy: Origin Energy, Oil Search, Worley Parsons.

These are not tips. Just observations. DYOR. Remember, any decision to invest or trade on the stock market is your decision. DYOR

The slugs are Consumer Staples and Consumer Discretionary. Contrarians would, of course, be looking to those two sectors first. (Being lumbered with a dual personality, I often sit on both sides of the fence, e.g., I’m looking with lust at Woolworths, one of the slugs, but until she puts on her party dress and yells “Let’s Boogie”, I’ll just continue leering.)

Good luck

Red

Weekend Summary week ended 10/12/2010

Let’s look at the positives – the markets generally are in strong uptrends. And until those uptrends turn down, that’s the place to be.

The negatives are largely speculative. Some charts (e.g., Nikkei) look like they could fall over as early as Monday. Any retracement is likely to be shallow as good support lies not far away, and medium to long-term strength is solid.

The key may be the market reaction on Monday to the Chinese news on increasing inflation. Another news item concerns the income tax situation in America. Apparently Obama has made a deal with the Republicans on the question of tax and the house votes on the deal on Tuesday. That’s another market moving piece of news. Remember – it’s not the news but the reaction to the news that’s important. Watch the charts and don’t try to second-guess what the markets reaction might be.

Good luck

Red

Market Comments 9/12/2010

This chart is beginning to ring some alarm bells.

XAO up today +0.75% on above average volume.

All's well. So where are the alarm bells.

1. The chart is now at a new 20-day high. That's a level at which reversals often occur. The chart might hang around there for another couple of days - but a fall then is highly likely.

2. The Daily Slow Stochastic is stubbornly up in the overbought zone. A fall below 80 would be a short term sell signal.

3. Two out of the last three days have been solid up days on above average volume. On both of those days the XAO finished well up near the top of its candle. Those are the types of days that smart money sells into - distribution from strong hands to weak hands.

None of that means we must get a big retracement like we saw in November. But it does send out a warning. Caution required.

Now - to a less obvious sign. The Small Ordinaries today was only up +0.2% while the 50-Leaders was up +1.0%. That imbalance in attitude to risk is also often a warning sign.

The Santa Rally so far has provided some good gains.

That Rally often delivers its gifts in two parts - early in December and then later in December - when Santa actually arrives.

I could be wrong - but I think we could have a bit of a dip in the near future. It will provide a great buying opportunity for later in the month. That is - if I'm right. I could easily be wrong. Wouldn't be the first time - wouldn't be the last time.

Cheers

Red

XAO and Gold ETF, morning comments 9/12/2010

XAO.

The very short term overbought condition of the XAO as measured by the RSI.2 was relieved by yesterday's negative day (down -0.5%). The short-term condition as measured by the Slow Stochastic (14.3) is still in the overbought range above 80. I believe caution should be exercised about new entries until this overbought condition is worked off.

Gold in Ozzie Dollars fell last night in the U.S. by -1.05%. Today, that will probably take the chart of the Gold ETF below the 13-Day SMA and below a key horizontal support level (see chart on last night's blog). I took profits on this stock some days ago; but, if I was still holding, I'd certainly be out today.

The action in the Gold ETF is a positive for the general market. Both were down significantly yesterday - it is uncommon for the two to trade in tandem.

I'm expecting a reasonable day on the XAO today.

Cheers

Red

Gold ETF 8/12/2010

The Gold ETF is clearly at a strong support level. A bounce higher here would be very bullish.

The stock is sitting right on horizontal support, and the support of the 13-day SMA.

A move higher would be another buy signal.

Surprisingly, though, the Gold ETF fell today in line with the XAO. Usually these trade in an inverse (but loose) correlation.

Tomorrow should be interesting, both for the Gold ETF and the XAO.

Cheers

Red

Market Comments 8/12/2010

The market was down today, XAO -0.51%.

The Slow Stochastic is overbought and has crossed marginally below its signal line.

Today's action was an "inside bar" - that denotes indecision. Volume was about average. Given that this is the middle of the week, when volume typically is higher than average, then we can assume that the punters were not putting a lot of faith in this pullback.

The market today broke below 4800, the first line of support. But the break was not decisive.

The next line of support is at 4770.

I'd expect a normal retracement at these levels to last 3-5 days without breaking any major moving average. The 50-Day Moving Average, for instance, is at 4740. If that holds, then I think we can expect to see another move upwards.

Let's see how it goes. DYOR.

Event stocks today? One stood out. CFX. In recent times it has been a perennial dog. Today it broke sharply higher on a weak day. hhhhmmmm. Volume was good.

I can't find any particular announcement marked as "price sensitive" to explain the move.

Yesterday before the opening they released a Melbourne property tour booklet. The announcement was marked as not price sensitive. I haven't read the booklet. I just offer it for what it is worth.

The jump today is something of a mystery to me. But I'm just a humble chartist trying to make sense of a chaotic environment.

In such an environment what does the big jump in the price of CFX mean? I'll leave that for you to judge.

Cheers

Red

Market Comments 8/12/2010

XAO Overbought, morning 8/12/2010

Here's the chart I promised last night showing the RSI.2. This is a 2-Day Relative Strength Indicator of the XAO. You can see it is been above the overbought line (70) for several days. More importantly it has been above 80 since the big move up last Thursday. Rarely does the XAO remain very short term OB for that length of time.

Also note that the Slow Stochastic with a setting of 14.3 is also reading overbought.

This is setting up for at least a day or two, perhaps more of downwards action. It could be the start of another retracement similar to the November one - but I doubt it. But - you never never know. Keep watching.

Good luck

Red

Market Comments 7/12/2010

Today I'm offering two charts of the XAO - a daily chart and a weekly chart.

First, the Australian market had a strong day today. Up +0.77%. That's not spectacular, but strong. Despite what you read in the daily news, the Australian market often leads the American market, not the other way round. Last night in America, the Dow Jones was down,

-0.17%.

When you see a positive divergence like this between our market and the Dow Jones, you can almost guarantee the American market will be up following the Australian market, at least in the first hour (until further news comes in).

Next - have a look at the divergence on the indicators on the Australian market - particularly the Slow Stochastic (weekly and daily). The Weekly Slow Stochastic has just crossed above its signal line. That's a bullish move. One only needs to look at other recent bull crosses on the weekly Slow Stochastic to see how positive that is.

On the other hand, the daily Slow Stochastic has risen above the 80 line - the overbought line, suggesting that a short term retracement is not far at hand.

That discrepancy should be welcomed by traders. It means that it is now "buy the dips" time.

This is not a market to be entering just now - but a great buying opportunity is just a few days away.

That's my opinion. You might have a different one. DYOR.

EVENT STOCKS:

Stocks from the 50-Leaders on Life Support (RSI below 30): NONE.

Stocks on the Critical List (RSI below 40):

Coca Cola Amatil, Fosters, Wesfarmers, Woolworths.

Stocks looking Buff (RSI above 60):

BHP, BSL, CSL, Lend Lease, Oil Search, QBE, RIO, Sonic Health, Worley Parsons.

Interesting - all the stocks on the critical list are from the Consumer Staples group - that's a defensive sector. Defensives are out of favour. That's a bullish sign. Again, that's just my opinion. DYOR.

Tomorrow morning I'll put up another chart, showing the short term overbought status of the market using the RSI.2 as a benchmark. I can't get that data until tomorrow morning. So look at it - if you're thinking of entering the market now - you might think again.

That's all for tonight.

Good luck

Red

Gold ETF morning 7/12/2010

The Gold ETF remains above the 13-Day SMA and the Parabolic SAR. Until it breaks one of those, it must be presumed to be in an uptrend.

The Daily MACD is still above its signal line. Another indication that the stock remains in an uptrend.

Last night, in America, Gold in Ozzie Dollars rose strongly - getting a double whammy from a rise in the US$Gold price and a fall in the Ozzie Dollar.

The Gold ETF may be setting up for a test of the recent high at 141.6.

Cheers

Red

Market Comments 6/12/2010

Friday and today were narrow range days on low volume. This suggests that the "Smart Money" isn't interested in buying into this market at these levels. A retracement back to support is probably in the offing. If the 13-Day SMA holds and we get a bounce on good volume, then the uptrend is probably a sure thing.

A break below 4640 on good volume would suggest a medium term bearish movement.

That's no foregone conclusion.

Today - the market barely moved. The XAO down -0.02%.

In America, no significant news is expected until Thursday. Our market will probably be in a narrow range until then.

Breadth on the Australian market remains positive.

Small Ordinaries was up strongly today, +0.9%, while the 50-Leaders was down -0.3%.

The Advance/Decline ratio was modestly bullish at 1.25.

Good luck

Red

Weekly Summary: week ended 3/12/2010

The following is a summary of the long report I send out to email subscribers:

SUMMARY AND CONCLUSION

I can’t imagine much more convincing evidence that we’re now on the next leg up of a bull market than I’ve shown today. The only major provisos are the chart of the Shanghai Index which hasn’t participated in the reversal upwards and some nagging doubts about volume.

So which of the following adages should be your guide:

Don’t look a gift horse in the mouth.

If it’s too good to be true then it probably is.

The medium/long-term trend of the market remains positive. This week the short term (daily chart) joined the other two in a bullish profile. When all three are in sync it’s probably safe to trade in the direction of the trend indicated by all three.

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

I’m expecting some consolidation early in the week, with possibly some pullback. What happens in the rest of the week, I’m unsure. If the sideways-to-down movement I’m expecting early on turns into a rout and the 200-Day Moving Average is broken decisively to the down-side, then it’s time to move out of the market.

I’m not expecting that to happen.

In the longer term, I’m quite positive about the market. But over the years, I’ve come to expect that when it’s obvious – it’s obviously wrong. Watch the market – and obey what it says. A break of last week’s support and it’s all over Red Rover. A break of the November high – and it will be blue skies. In the words of Creedence Clearwater Revival, we’ll be chooglin’.

Good luck

Red

Initial Comments, Friday, 3/12/2010

Yesterday, we were cruising down the freeway, blue skies, with the motor purring.

Today, it looked OK - but there are big storm clouds on the horizon.

The market is now short-term overbought. On the ASX-200 chart the Slow Stochastic (5,5) has now hit 80 - that's the overbought line. It can still go higher, but caution is required.

Perhaps more telling, is the %age of stocks in the 50-Leaders above the 10-Day Moving Average. It has now hit the 80% level. Again this is a short term oversold reading. It can still go higher - but above 90% is usually as far as it goes without a retracement.

Today's price/volume action suggests that some big time punters were selling into today's strength, i.e., smart money was taking profits. That may have just been a little nervousness ahead of the jobs report out in America tonight. That can move the market. But the smart money is rarely wrong. That suggests to me that at least of bit of down time action can be expected early next week.

So the next couple of days may be crucial to the health of the market. Some weakness can be expected. It's probably "buy the dips" time. But we'll just have to gauge how it goes in the next couple of days.

I'll be doing an extensive analysis over the weekend, as usual, and I'll put up a summary later in the weekend.

The Gold ETF was down solidly today. So it looks like I might have been wise taking profits yesterday. We'll see.

Cheers

Red

Here's a Different View 2/12/2010

Sometimes I think the stock market is all fuzzy - it's like driving along a steep winding mountain road at night in a deep mist - and all you can see ahead is two white lines on the road.

At other times, driving the stock market road is just fine and dandy - you can see for miles, the sky is blue, the sun is overhead, the road is dead straight, the V8 is purring, and Creedence Clear Water Revival are thumping out of the car radio:

Keep on Chooglin'
Keep on Chooglin'
Keep on Chooglin'
Chooglin',
Chooglin'.

Well - that's how I feel tonight.

That uptrend channel says it all, and we've busted right off the bottom of it.

So, folks.

I'lm gonna

Keep on Chooglin'

I hope you do too.

Good luck,
Red

Market Comments 2/12/2010

XAO up 1.8% today.

Today was an emphatic change in the trend from down to up. We don't often get to see such positive days on the market. Unless there's a Black Swan event, the market appears to have more room for upward movement.

Plenty of beaten down stocks, particularly amongst the big banks, made sizeable gains.

But, for me, the standouts were the blue chips making 20-Day New Highs. These were:

• Asciano
• Brambles
• CSL
• Oil Search

This is a disparate group but common to all four are their leverage one way or another to movements in the global economy.

Stocks remaining on Life Support (RSI under 30) are:

• Coca Cola Amatil
• Woolworths.

Stocks on the Critical List (RSI under 40) are:

• Fosters
• Wesfarmers

Stocks (other than take-over targets) on Testosterone (RSI above 70) are:

• Sonic Health Care

Other stocks of interest today with RSIs over 60 were:

• BHP
• TLS

Today I was like a kid in a lolly shop. The dart-board stock-picking method would have invariably picked winners today. On such a day of broad based advances it's probably best to stay calm and if you have to enter the market, instead of trying to pick the best stocks, just buy the XJO index tracking stock, STW. It was up 2.03% today. It has the advantage of lower volatility, lower transaction stocks than buying a basket of stocks, and high liquidity. The spread today was only about one cent on a stock trading in excess of $44. Anyway - that's just my lazy old man's opinion. You might have a different one.

Cheers

Red

Gold ETF morning 2/12/2010

Time for me to take profits on the Gold ETF.

As you know, I like the Gold ETF mainly as a hedge against falls in the general market.

Today's action in both the general market and the Gold ETF suggests that the current pull-back in the XAO is over.

The Gold ETF today is showing a bearish engulfing bar. The RSI as of yesterday was overbought at 73.1. Any reading over 70 puts the stock on the endangered list. Today the RSI broke below its uptrend line - nearly always a sure sign that further falls lie ahead.

I may be pre-empting the market. The stock still hasn't broken below its 13-Day Moving Average nor below the PSAR. More conservative investors than I might wait for those events.

Good luck

Red