TRENDS:
- XJO: monthly chart - UP. Still above the 10-Month MA. Positive. In a very long term sideways
consolidation. (The one chart IMO the long-term investor needs to look at.)
- XJO: weekly chart - UP. Above 13-Week MA. Stochastic at overbought. Caution.
- XJO: daily chart - up. Light volume puts question mark over the current rally.
- SP500: medium-term and short-term - Up.
- Nasdaq: short-term - up. Overbought - caution.
- Small Ordinaries: Relatively weak compared to ASX200. Caution.
- Ozzie Dollar: Multi-year highs. Stochastic and CCI dropping - caution
- Gold in Oz Dollars: short-term trend - down. Indicators neutral. On the cusp
- Copper - the short term trend is up in a medium term down trend channel.
XJO currently at 4913.
Major Support and Resistance for XJO: Resistance: 5000; Support 4200 . Mid-point 4600.
Seasonality - last week of April in the 3rd Yr of the Presidential Cycle has been neutral.
Sentiment - Generally too bullish to sustain further advances. But see: http://tradersnarrative.wordpress.com/2011/04/22/sentiment-overview-week-of-april-22nd-2011/
Several disturbing and variously unrelated undercurrents:
Relative weakness of Australian Small Ordinaries
Speculative Bubble in Silver
Medium term down trend in copper
Low volume on the Australian market
Very low reading in implied volatility (VIX) - too much complacency
Disquiet about the Australian government’s performance in areas such as resouces and carbon taxes.
Rumours beginning to circulate that the government will try to make house prices more affordable by tackling pricing pressure from property investors. Such action would be have unexpected consequences for the banking sector and the stock market.
Speculative Bubble in Silver
Medium term down trend in copper
Low volume on the Australian market
Very low reading in implied volatility (VIX) - too much complacency
Disquiet about the Australian government’s performance in areas such as resouces and carbon taxes.
Rumours beginning to circulate that the government will try to make house prices more affordable by tackling pricing pressure from property investors. Such action would be have unexpected consequences for the banking sector and the stock market.
(see: http://www.smh.com.au/national/talks-test-the-water-on-negative-gearing-change-20110420-1doxq.html)
Such a list requires mention of: bond yields in Greece Portugal and Ireland going parabolic, Oil Price, Libya, Middle East, Japan, Nuclear fears, China’s efforts to restrain inflation, other East Asian economies’ efforts to restrain inflation, Sweden raises rates, EU raises rates, Thailand raises rates, Brazil raises rates, Standard & Poors puts U.S. credit rating on ‘negative’ status, etc., etc., plus unknown black swans.
Such a list requires mention of: bond yields in Greece Portugal and Ireland going parabolic, Oil Price, Libya, Middle East, Japan, Nuclear fears, China’s efforts to restrain inflation, other East Asian economies’ efforts to restrain inflation, Sweden raises rates, EU raises rates, Thailand raises rates, Brazil raises rates, Standard & Poors puts U.S. credit rating on ‘negative’ status, etc., etc., plus unknown black swans.
None of the above precludes the market going higher - but together they make for a weakening context. And that qualifies for Understatement of the Year :)
Short term the market looks like it is going higher but I’m expecting at least a short term top and possibly an intermediate term top in the next week or so.
Good luck
Red
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