Morning Coffee. Tuesday, 5 April, 2011

Morning review:

America

1. Dow Industrials +0.19% (finished at 12400.03)
2. Dow Transports 0.16%
3. SP500 +0.03%
4. Russell 2000 +0.31%
5. Nasdaq100 -0.36%

Comment: Relatively flat night.  Small gains in the Russell 2000 were counterbalanced by weakness in the Nasdaq100.  The Nasdaq Composite was down (the broad Nasdaq index) -0.01%. See Technical Commentary below

Europe

1. France -0.29%
2. Germany -0.06%
3. London +0.12%

The picture in Europe was similar - flat.

EWA (Australian Shares ETF traded on the New York Stock Exchange). -0.11%

Australian Dollar closed just at 103.7 last night. -0.18%. Flat. (The poets were out last night - a lot of rhyming going on.)

Technical Comment on the American Market:

1. Current run-up in the Dow Industrials is similar in scale and time to run-ups in June/July 2010.
2. Index is now at 12400 (resistance area).
3. RSI at 62.7 is in the caution zone but can go higher.
4. Stochastic is overbought and flattening out.  Caution
5. Today's candle was an "inside" candle (inside the range of the previous one) - on low volume, lower than the previous two days volume.  No demand here.  A down day tomorrow would be a short term sell signal.
6. Significant support in the congestion zone (circled).

The lines of demarcation are clear: above 12400 - very bullish, below 12000 - very bearish.

Dow Theorists are rubbing their hands.  Both the Dow Industrials and the Dow Transports finished last night at market rally highs.  That's a Dow Theory buy signal.

I dunno.  The close by the Industrials was marginally higher by nine points or 0.07%.  That's insignificant unless you're taking a close-up view with a microscope.  Given that the rise today was an inside day on low volume - I can't see that the action today was a case for cheering and a "let's go" signal.  I'd want confirmation with a strong up day tomorrow - and that would put the market into ever higher "overbought" territory.  hmmmm. 

Today in Australia?  With a flat overnight market and Industrial Metals down -0.63%, I think our market will struggle today.  But - you never, never know.

Good luck

Red