The market (XAO) today was down a moderate -0.5%. That might have been a better result than some people had expected after the big fall in America on Friday night - but the Australian market had already anticipated that fall in trading here in Australia on Friday. If you look at the Volume Histogram - it is clear that the Australian market is down three days in a row. Only once in the past 100 trading days has the market been down four days in a row. So the odds favour an up day tomorrow.
Plenty of technical damage has been inflicted on the market:
- The Index (XJO) is now below the 13-Day Moving Average.
- the RSI is below its mid-line
- the MACD Histogram is below Zero
- the Stochastic is below its signal line and headed down
However, the medium term trend remains up. Until the 65-Day Moving Average and the Super Trend line get broken to the down side, this trend remains intact.
Breadth
Small Ordinaries Index (-0.3%) was a little better than the general market. Mid-caps Index was considerably worse (-1.1%).
The Advance/Decline Ratio was 0.61. Better than Friday - but not a number to inspire confidence.
To sum up - I'm expecting a bounce for a day a two before the downside pressure reasserts itself. Breadth readings are just too negative to think that this is the end of the decline.
Remember - the stock market is a mechanism designed to take money from the many and give it to the few ... so ....... be wary.
Good luck
Red
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