INTOLERABLE

This week the problems with blogger have been intolerable.  At times I've been able to upload images but no text.  Then ... I was unable to upload anything at all.

I've moved the blog to:

http://redbackmarketreport.wordpress.com

I have no idea how reliable Wordpress blogger is - but it can't be worse than I've experienced this week.  :)

The blog I've set up on Wordpress is still a bare bones affair - but I hope to get around to dressing it up this week end.

In the meantime, the daily Morning Coffee for Saturday is up.  Content is the key for a blog like this - and the usual informative analysis is provided today.

Good luck
Red

Postprandials, Thursday 12/5/2011

That last candle looks UGLY.  So ... a frog about to be kissed by a princess is ugly.  :)

Let's take a look at the stats:

• XJO (ASX200) -1.8%
• XTL  (Twenty Leaders) -1.8% 
• XFL (Fifty Leaders) -1.8% 
• XFJ (Financials) -1.5% 
• XMJ (Materials) -2.6% 
• XSO (Small Ordinaries) -1.8% 

The best performing Sector today was Telecoms -0.2%.

Technical Comment on the ASX200 Market:

• The Index is below 50-Day MA and the 13-Day MA.  Negative. 
• Indicators: 

1. Slow Stochastic 12.6.  It continues in the Oversold region
2. The 13-Day MA is above the 50-Day MA.  Positive 
3. RSI  38.9.  In the Caution zone if you are short.
4. MACD Histogram below Zero.  Negative.  
5.  MACD below the Zero line.  Negative 
6.  CCI -110.8 .  Back below -100.  Look for a rise above -100 for a buy signal. 

Positive divergences are beginning to appear between the indicators and the index chart.  These mean zilch until a hook up starts to occur.  But it is promising.

Volume today was well above average - in excess of 1.5billion shares traded for the All Ordinaries.  That's the heaviest since late March.  Panic selling?  Maybe.  But in the middle of March we saw a series of days higher than that and two days in excess of 2billion.  So, today was bad.  But we might be looking at worse.  

Final opinion:  we're not far off a medium term bottom.

Good luck

Red

Morning Coffee, Thursday 12/5/2011

In America:

1. Dow Industrials -1.02% 
2. Dow Transports -1.27%
3. SP500 -1.11%
4. Russell 2000 -1.78%
5. Nasdaq100 -1.76%

Comment: Ouch.  That hurt.  

The Materials Sector -2.66% and Energy Sector -2.89%.   That's an even bigger OUCH - and a big minus for Australia.  The Banking Sector was down -0.98%.  Semi-conductors was down -0.83%.  

Europe:

1. France +0.14%
2. Germany -0.09%
3. London -0.71%

EWA (Australian Shares ETF traded on the New York Stock Exchange) -1.98%, The Australian Dollar was down -1.33% to finish at 106.94 - that's another big ouch.  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was up +0.33% in the past 24 hours.  That compares with a fall of over -1% in the price of Gold in U.S. Dollars.    

Technical Comment on the SP500:

1. The SP500 finished at 1342.08.  Well above the support of the recent low at 1330.
2. The Index is back below the 13-Day MA (negative) .  
3. Above the 50-Day MA (positive).
4. Indicators:
• Slow Stochastic 56.2.  Falling.  Negative.   (It looks like it needs to get to below 20 before a rebound can take place.)
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 52.3 and falling.  Headed for the 40 area?
• MACD Histogram below Zero.  Negative. 
• CCI +26.3 and falling.    Negative.

And the price of oil was slammed last night (-4.57%) - now back below for West Texas.   (Yesterday I said:  This looks to me like a pause before a drop back below 100.)  

The action in America last night was even more negative than the night before.  Support at 1329 beckons.

This will knock the nascent rally from yesterday in Australia.  I doubt the "buy the dips" crowd can save it today.  But, in the short term, I still don't think there's a lot of downside for Australia.  In the medium term, I'm sticking to my mantra "sell the rallies" until I see good evidence to change the chant.

Good luck

Red

Postprandials, Wednesday 11/5/2011

Today the XJO (ASX200 - chart above) finished up 1.2%.  Volume was solid without being spectacular.  That's good - very high volume on a big up day often conceals selling by the "smart money".

Other major indices today:

• XTL  (Twenty Leaders) +1% 
• XFL (Fifty Leaders) +1% XFJ (Financials) +0.6% 
• XMJ (Materials) +1.9% 
• XSO (Small Ordinaries) +1.6% 

The best performing Sectors today were Materials +1.9%, Info.Tech. +1.8%, Energy +1.7%.  

Technical Comment on the ASX200 Market:

• The Index is below 50-Day MA and the 13-Day MA.  Negative. 
• Indicators: 

1. Slow Stochastic 18.8 and rising above its signal line.  Positive. 
2. The 13-Day MA is above the 50-Day MA.  Positive RSI  47 and rising.  It has broken above its down trend line from early April.  Positive. 
3. MACD Histogram below Zero.  Negative.  but rising.
4.  MACD below the Zero line.  Negative 
5.  CCI -79.7 and rising.  It has broken above -100 for a buy signal. 

In the 50-Leaders the ratio for Advancers and Decliners was 5.1:1 - very bullish.  The A/D Ratio for the general market was 1.5:1 - positive but not especially so.  I'd prefer to see the A/D line for the general market better than that on a strong day.  The Small Ordinaries (top chart), in the short term, continues to outperform the XJO.  That's a positive.

Today's performance was good.  The market now needs to confirm with some follow-through buying.

Formidable resistance lies overhead.  

Morning Coffee, Wednesday 11/5/2011

In America:

1. Dow Industrials +0.6% 
2. Dow Transports +1.05%
3. SP500 +0.81%
4. Russell 2000 +1.56%
5. Nasdaq100 +0.85%

Comment: The SP500 has now been up three days in a row.  The market today was generally strong with excellent breadth in the Small Caps (Russell 2000).  

The Materials Sector +0.85% and Energy Sector +0.47% were both up.   That's something of a plus for Australia.  The Banking Sector was up +0.93%.  Semi-conductors was solid +0.5%.  

Europe:

1. France +1.13%
2. Germany 1.23%
3. London +1.28%

EWA (Australian Shares ETF traded on the New York Stock Exchange) +0.51%, The Australian Dollar was up 0.37% to finish at 108.42 - still below the dizzy heights of the 110 region but bouncing back strongly.  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was relatively flat -0.19% in the past 24 hours.  That compares with a rise of about 0.2% in the price of Gold in U.S. Dollars.    

Technical Comment on the SP500:

1. The SP500 finished at 1357.16.  In a support zone but just above a good support zone.
2. The Index is above the 13-Day MA (positive) .  
3. Above the 50-Day MA (positive).
4. Indicators:
• Slow Stochastic 65..  At its signal line and rising.  Positive.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 60.7 and rising.  It's just sneaking into the caution zone (60-70).
• MACD Histogram marginally above Zero.  Neutral.  But rising. 
• CCI +75.4 and rising.    Positive.
5. The SP500 is in an uprising channel.  Positive

And the price of oil rose last nigh (+1.15%) - now at 103.93 for West Texas.   This looks to me like a pause before a drop back below 100.  Geopolitical events could easily change that outlook.

The action in America last night was positive from the bullish point of view.  Major resistance of the recent high 1365 looms ahead.   A break above there should see the index head up to the top of the channel.

I've been saying since the weekend before last that the Ozzie market would probably be a case of "sell the rumour, buy the fact".  The fact being the budget.  Today looks like a "buy" day to me.

Good luck

Red

A big problem

Hello,

I've just noticed that the charts I posted earlier today, although dated 10 May, are, in fact from 9 May.

Big big difference.

Somehow, the software package that I use (ProRealTime) hasn't updated the chart for today although the chart's date has been updated.

The analysis on the blog today is, therefore, relevant for yesterday, but not today.  :( :( :(

I'm still waiting for an up to date chart from ProRealTime.  That compounded with my problems with Google over the past two days makes me both embarrassed and annoyed - with the internet providers and myself for not noticing.

My apologies if I have misled anyone.

Good luck
Red

Postprandials, Tuesday 10/5/2011

Problem with the loading up of text is now fixed.  Thank you google.

I've shown two charts today - XJO (ASX200) and XSO (Small Ordinaries).  XSO is used as a measure of the market to take on risk.

Although similar, the two charts have distinct differences.  The XJO (bottom chart) is just shy of giving "buy" signals.  The XSO (top chart) is now registering "buy" Signals.

XSO Indicators:

1. Relative strength (XSO:XJO - bottom pane) has broken above the down trend line from early April (positive)
2. Stochastic (19.1) has crossed above its signal line.  Its just a smidgin below 20 - the secondary buy signal.
3. CCI (-89.8) has crossed above -100, that's a buy signal.
4. RSI still needs to cross above its down trend line.
5. MACD needs to cross above its signal line.
6. Index chart needs to cross above major resistance.

All that is more positive than the XJO.  Note:  the XJO was down -0.36% today.  XSO was up +0.46%. That's a major positive divergence.

I've been saying for over a week, that our market was showing weakness ahead of tonight's budget.  There are no guarantees but it looks to me like some smart people are positioning for a positive reaction to the budget.  Or at least, nervousness created by the prospect of the budget will be removed.  Certainty will be attained.  And the market will be free to move up unless there are some unexpected nasties in tonight's papers.

Good luck

Red

9/5/2011 Unable to post text - see brief comment in comments

Postprandials, Monday 9/5/2011

Morning Coffee, Saturday, 7 May, 2011

In America:

1. Dow Industrials +0.43% 
2. Dow Transports +0.32%
3. SP500 +0.38%
4. Russell 2000 +0.49%
5. Nasdaq100 +0.34%

Comment: After being down four days in a row, it's not surprising that the market had a positive day.  Friday was Jobs Report in America.  In a burst of relief/euphoria, the market gapped up strongly to be up over 1% - but saner minds then sold the market off as the Jobs Report was not as strong as first appeared.  Volume was low - the lowest in thirteen days on the SP500.  This looks like a low volume test of the upper limits - that's bearish.

The Materials Sector +0.82% and Energy Sector +0.44% were both up.   That's something of a plus for Australia.  But I wouldn't bet on it.  The Banking Sector was up modestly +0.2%.  Semi-conductors had a better day +0.75%.  

Europe:

1. France +1.33%
2. Germany 1.56%
3. London +0.96%

At the close, Europe was still under the influence of the initial euphoria generated by the Jobs Report.  America only fell away later in the trading sessions.

EWA (Australian Shares ETF traded on the New York Stock Exchange) +1.78%, The Australian Dollar was up 0.95% to finish at 106.87 - still well below the dizzy heights of the 110 region.  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was up +0.52% in the past 24 hours.  That compares with a rise of about 1.5% in the price of Gold in U.S. Dollars.    

Technical Comment on the SP500:

1. The SP500 finished at 1340.2.  In a support zone but just under strong resistance.
2. The Index is below the 13-Day MA (negative) after rising above it in early trade.  
3. Above the 50-Day MA (positive).
4. The doji candlestick (open and close about the same) is usually taken as a sign of indecision.
5. Indicators:
• Slow Stochastic 60.9.  Below 80, below its signal line and falling.  Negative.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 53.1.  Above 50.  Positive.
• MACD Histogram marginally below Zero.  Neutral.  But falling. 
• CCI +37.2 and rising.    Neutral.

And the price of oil dropped again last nigh (-1.74%) - now well below 100 for West Texas.   Momentum to the downside is decelerating.

The action in America last night was disappointing from the bullish point of view.  The major indicators still have plenty of downside room to move.  I think there's more downside in the American market until the Stochastic gets to an oversold level.  

But - a doji is usually interpreted as indecisive.  So the action on Monday night might tell the story.

I think Australia will be up early on Monday - but possibly come off a bit after that.  A strong white candle on Monday would boost the bullish case and probably be a buy signal.

Good luck

Red

Postprandials, Friday 6/5/2011

Today the XJO (ASX200 - chart above) finished down -0.3%.  That reverses the small rise yesterday.  

I'm a bit disappointed with the "buy-the-dips" mob today. :)  I thought they might push the index higher - but I guess the thought of a poor Jobs Report tonight in America might have deterred some of them.  But - the index did finish well up off its lows.  Another reversal day upwards.

Other major indices today:

• XTL  (Twenty Leaders) -0.3%
• XFL (Fifty Leaders) -0.2%
• XFJ (Financials) +0.4%
• XMJ (Materials) -1.4%
• XSO (Small Ordinaries) -0.4%

The best performing Sectors today were Consumer Discretionary +0.7%, Health +1%.  

Technical Comment on the ASX200 Market:

1. The Index is below 50-Day MA and the 13-Day MA.  Negative.
2. Indicators:
• Slow Stochastic 11.7 and rising.  Oversold.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI below its mid-line, now 40.5.  This is an area where a reversal can be expected - but needs to rise above 50 to prove itself.  On the other hand it could easily go lower.
• MACD Histogram below Zero.  Negative. 
• MACD below the Zero line.  Negative 
• CCI -146.21 and rising.  it needs to rise above -100 for a buy signal.
3. Volume was high and increasing - a positive on a reversal day.

In the 50-Leaders the ratio for Advancers and Decliners was 1.35:1 - mildly bullish.  The A/D Ratio for the general market was 0.88:1 - mildly bearish.  I'd prefer those to be reversed to have confidence in the background buying.

The retail investors have become conditioned to "buy the dips".  They may be right.

But there are a number of tell-tale signs that the market is reverting to a medium term bearish trend.  The Small Ordinaries, while strong recently, have generally been under-performing  the 50-Leaders.  That's a tell-tale sign.  The Telecommunications sector which has been one of the worst performing sectors over the past year, seems to be gaining strength relative to the general market.

Yesterday strength was located in the Materials and Energy sectors.  Today that was reversed.  Leadership is switching from sector to sector.  A combination of factors will either see this market swing up or down.  

Formidable resistance lies overhead.  

Today was promising.  And the probabilities have swung to the upside for now.  But tonight's action in America seems to be the key.

We shall see.

Good luck

Red

Morning Coffee, Friday, 6 May, 2011

In America:

1. Dow Industrials -1.1% 
2. Dow Transports +1.14%
3. SP500 -0.91%
4. Russell 2000 -0.44%
5. Nasdaq100 -0.52%

Comment: The SP500 has been down four days in a row.  Volume has increased each day.  Breadth in the market (small caps) and transports has improved with the fall in the oil price.  The SP500 is in a Zone of Support.  If this is going to bounce, now seems like the time.

The Materials Sector -1.17% and Energy Sector -2.08% were both down.   That's a minus for Australia.  The Banking Sector was also down -1.33%.  Semi-conductors flat (again) +0.15%.  

Europe:

1. France -0.95%
2. Germany +0.04%
3. London -1.07%

EWA (Australian Shares ETF traded on the New York Stock Exchange) -1.53%, The Australian Dollar was down -1.49% to finish at 105.86 - falling well below the 110 region.  It is also into a Zone of Support (104-106).  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Gold in Oz Dollars was down -1.69% in the past 24 hours.  That compares with a fall of over 3% in the price of Gold in U.S. Dollars.    

Technical Comment on the Dow Industrials:

1. The SP500 finished at 1335.1.  In support zone.
2. The Index is below the 13-Day MA (negative) but still above the 50-Day MA (positive).
3. Four days down in a row and accelerating.  (Time to put the brakes on?)
4. Indicators:
• Slow Stochastic 68.1.  Below 80, below its signal line and falling.  Negative.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 50.5.  Falling but still above 50 (just).  Neutral.
• MACD Histogram at Zero.  Neutral.  But falling. 
• CCI +14 and dropping.    Negative.

And the price of oil dropped sharply last nigh (-9.16%) - now below 100 for West Texas.   That's a blessing and a curse.  The good news shows up in the Transport Index - and can be read as good for the consumer and the American economy.  The bad news is that it may be reflecting a weakening global economy. 

It's Non-Farm Payroll Report tonight in America.  (The Jobs Report.)  A poor report tonight could put the nail in the coffin.  A good report - and we could see the end of this retracement.

Today in Australia?  Who knows.  Maybe the "buy-the-dips" crowd will prevail once again after an early sharp dip.   

Good luck

Red

Today the XJO (ASX200 - chart above) finished up +0.3%.  Today was a reversal day upwards on heavy volume.    

Other major indices today:

• XTL  (Twenty Leaders) +0.4%
• XFL (Fifty Leaders) +0.2%
• XFJ (Financials) -0.1%
• XMJ (Materials) +0.8%
• XSO (Small Ordinaries) +0.8%

The best performing Sectors today were Telecommunications  and Energy, both up +1.4%.  

Technical Comment on the ASX200 Market:

1. The Index is below 50-Day MA and the 13-Day MA.  Negative.
2. Indicators:
• Slow Stochastic 10.2 and falling.  Oversold.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI below its mid-line, now 41.6.  It's now back above the caution zone for shorts (30-40).  it still needs to rise above 50 for the longs to be comfortable.
• MACD Histogram below Zero.  Negative. 
• MACD at the Zero line.  Neutral 
• CCI -171.1 and rising.  it needs to rise above -100 for a buy signal.
3. Volume was high and increasing - a positive on a reversal day.

In the 50-Leaders the ratio for Advancers and Decliners was 0.75:1 - mildly bearish.  The A/D Ratio for the general market was 1.2:1 - mildly bullish. 

There were several things to like about today's action.  A reversal day upwards on heavy volume is probably a sign that this retracement is over.  Small Ordinaries were strong and there was strength in the Advancers/Decliners ratio.  I mentioned yesterday that I thought there was buying in the background.  That was borne out today.

The strength of this rebound will tell whether or not this is a dead cat bounce generated by the "buy the dips" mob, or just a pause in a further large decline.

The retail investors have become conditioned to "buy the dips".  They may be right.

But there are a number of tell-tale signs that the market is reverting to a medium term bearish trend.  The Small Ordinaries, while strong today, have generally been under-performing  the 50-Leaders.  That's a tell-tale sign.  The Telecommunications sector which has been one of the worst performing sectors over the past year, seems to be gaining strength relative to the general market.

Today's strength was located in the Materials and Energy sectors.  The same strength wasn't seen in the Financials.  I would have liked to have seen strength in all three sectors.  But maybe you can't get all your wishes in one day.

Formidable resistance lies overhead.  If that can be overcome, then my concerns will have been short-lived.

Today was promising.  The bulls will be celebrating right now and looking forward to further rises.

We shall see.

Good luck

Red