Morning Coffee, Good Friday, 22 April, 2011

In America:

1. Dow Industrials +0.42% 
2. Dow Transports +0.61%
3. SP500 +0.53%
4. Russell 2000 +0.74%
5. Nasdaq100 +0.83%

Comment: The frenetic pace of the past two days eased a little today but the result was still solid. Breadth was very good.  The Materials Sector was in line +1.07%.  That's a plus for Australia.  The Banking Sector joined the party +0.42% but still looks relatively weak.  Semi-conductors was flat -0.05%, that was after a very strong day the previous day.  

Europe

1. France +0.43%
2. Germany +0.64%
3. London -0.07%

EWA (Australian Shares ETF traded on the New York Stock Exchange) +1.19%, The Australian Dollar was up +0.41% to finish at 107.48.  (Here comes 110?)

Technical Comment on the American Market:

1. The S&P 500 finished at 1337.38.  
2. The Index is above both the 13-Day the 50-Day MAs.  Positive.
3. Indicators:
• Slow Stochastic 71.7 back above its signal line and rising.  Positive
• Well above the 13-Day MA is above the 50-Day MA.  Positive
• RSI above its mid-line, now 59.9.  Positive
• MACD Histogram at Zero.  Neutral.  But rising - positive
• CCI +97.6 and rising.  Positive.
4. Volume was lower than the previous two days - demand is easing.

Complacency is the biggest concern as the VIX (the volatility or "fear" index) approaches extreme lows.  The chart below shows the VXX, the ETF based on the VIX.  The CCI has hit the -250 area.  A reading below -200 is rare and usually accompanies a reversal.  A reversal upwards in the VIX usually means "fear" and a fall in the broad market.

In the past 24-Hours Gold in Ozzie Dollars has fallen -0.22%.  That's a positive for our broad market.  

And the price of oil remains high - hovering around the 110 for West Texas.

The positive seasonality in the week before Easter has played out.  The SPX broke marginally above resistance today.  

The U.S. has only a three-day long weekend compared to Australia's five-day long week-end.  So the U.S. will see another two days of trading before Australia resumes.  The U.S. market looks like having a breather on at least one of those days, but after that it heads into the end of the month which is often strong.  The February high at around 1345 looks to be under threat.  Whether or not it caves in - we'll have to see.  There's nothing in the technical picture at this stage to suggest a reversal is imminent - a pause perhaps - but nothing to give the bulls a worry.  

Have a good weekend
Red