Morning Coffee, Thursday, 5 May, 2011

In America:

1. Dow Industrials -0.66% 
2. Dow Transports -1.56%
3. SP500 -0.69%
4. Russell 2000 -1.29%
5. Nasdaq100 -0.22%

Comment: This looks like the start of a retracement.  Actually, its just that the Dow Industrials has now joined the rest of the indices.   

The Materials Sector -1.77% and Energy Sector -1.77% were both down.   That's a minus for Australia.  The Banking Sector was also down -0.97%.  Semi-conductors flat +0.06%.  

Europe:

1. France -1.31%
2. Germany -1.69%
3. London -1.62%

EWA (Australian Shares ETF traded on the New York Stock Exchange) -1.54%, The Australian Dollar was down -0.89% to finish at 107.46 - falling well below the 110 region.  A strong Ozzie Dollar is needed to maintain the liquidity for a strong stock market.  Those are further negative signs for Australia today.  Gold in Oz Dollars was down a little at -0.28% in the past 24 hours.  

Technical Comment on the Dow Industrials:

1. The Dow Industrials finished at 12723.6.
2. The Index is above both the 13-Day the 50-Day MAs.  Positive.
3. A black candle after two doji candle-sticks in a row.  Bearish.
4. Indicators:
• Slow Stochastic 87.7.  Overbought - Strike One.  Below its signal line -  Strike Two.  Needs to fall below 80 for Strike Three. 
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI now 65.5.  Falling below 70.  A break below 70 is a sell signal.
• MACD Histogram above Zero.  Positive.  But falling. 
• CCI +96.4 and dropping.    A break below 100 is another sell signal.

The Nasdaq Composite shows a worse technical picture with three sell signals:  RSI breaking below 70, CCI breaking below 100, Stochastic below 80.  A break by the MACD Histogram below Zero would complete the quadrella.

And the price of oil dropped off the recent high (-1.78%) - now below 110 for West Texas.  

My opinion:  this is not a time for entering the market. 

Good luck

Red