Market Comments 8/3/2011

The XAO finished up 0.1%. Marginal.

Today the market (XAO/XJO) came close to tripping over the precipice. But, in the end, it teetered back above both the major horizontal support line and the intermediate oblique support line.

Divergences on major indicators are generally positive (Stochastic, Directional Movement and MACD Histogram). Movement above the Zero line by the Directional Movement and MACD Histogram are needed to suggest the trend has changed to the upside.

Here's an interesting statistic. The Ratio of Unchanged Stocks to the Total Stocks is, today, at 0.234. That's the highest since 12 January 2011. 12/1/2011 marked the end of a short term down trend from late December 2010 into early January 2011. Why that Ratio should be of importance beats me. But historically it seems to mark bottoms in short term down trends.

On the negative side, Small Ordinaries were down -0.5%. It would be better if that figure was positive and in consistent with the rise in the broader market.

The market is in the thrall of the geo-political events occurring in the Middle East and North Africa. It has, however, an uncanny ability to sus out future events. If the markets start rising, you can be sure that the MENA crises are reaching a resolution.

Good luck

Red