This is the most promising chart we've had for a long time.Today's long-legged doji candlestick is clearly the most promising candle we've seen so far in this decline. A big down opening and then the market clawed back to finish flat. Volume today was over 2Billion shares traded. That's the highest volume since May 2010.
We've seen three major reversal days up out of the past four. There's still plenty of supply coming on to the market but it's being hoovered up. That's a scenario setting up for a major short squeeze. Reaction upwards is likely to be quite dramatic.
But - nothing's for sure until we get some follow through buying. The previous two reversal days haven't met that criterion - and so the market was still in doubt.
A gap up opening tomorrow could make this very, very interesting.
On the negative side, Small Ordinaries were still down -0.5%. That's not a good sign for risk appetite. But that could spin around quite quickly. That negative view is supported by the Advance/Decline Ratio at 0.76:1. That's still on the bearish side of the ledger. AdvancingVolume/Declining Volume registered 0.73:1. Given the flat finish on the general market, that's not an optimistic figure on the Volume ratio.
The Relative Strength Index has registered below 30 on the past four days. That's an extreme oversold condition. I'd expect some sort of rebound on those figures. But - it's also a bear market reading. So, in the short term it may (paradoxically) be positive, in the medium term it suggests that this market is under extreme negative influences. That can change. But I'd still like to see the Stochastic on the Weekly chart hit oversold before becoming confident about a sustainable rebound.
No comments:
Post a Comment