Comment: Two major indices (Dow Industrials, SP500) were flat last night. I mentioned yesterday that Transports (Ugly Betty) might pause today after two big down days. It was up modestly. Breadth (R2K) was in line with the major indices. The Industrials were up about 60 points in the middle of the session, then gave back most of that in the last hour. SP500 performed similarly. The last hour drop in the SP500 completed an intra-day double-top. That may or may not carry through to the next session (down) but it’s not bull friendly.
NewHighs/NewLows 195/4. NH>NL. The ratio of NH/(NH+NL) is at 98%. In the Do Not Sell Zone. The slide in New Highs was reversed last night. New Lows are almost non-existent. These numbers remain bullish.
Technical Comment on the Dow30:
The Dow finished at 13577.96. Support/resistance: 13274.7/14165 MACD Histogram. Above zero. Positive. MACD. Above zero. Positive. RSI.9 is at 73.9. Overbought Stochastic. 87. Overbought. CCI.14: +103.7. Overbought
The medium term trend is up. The short term trend is up (just). Major horizontal resistance now lies at the October, 2007 high. If the Index can get above the current major oblique resistance, it should be able to make the 2007 high.
Despite the bull rally since early June, On Balance Volume is a long way from confirming the new multi-year high in the Industrials. This rally has run for nearly four months, but the OBV hasn’t been able to recover the selling pressure exerted in the one month fall back in May. That, along with the non-confirmation by the Transports, is a concern.
It’s a while since we’ve looked at Apple. It’s now over $700 and at the top of a channel. It is also showing a disconcerting negative divergence on the On Balance Volume:
A few weeks ago I noted in my Weekly Report that tops and bottoms in OIL tend to correlate well with the Industrials – often OIL is a leading indicator. After three big down days, it’s due for a pause. Here’s the Oil chart:
I’m painting a picture where upside risk is limited, down side risk is getting stronger as this rally in the major indices progresses.
Looking at some factors that might influence Australia today, Base Metals up moderately (+0.45%), AUD/USD up moderately (0.52%), USD Gold flat (+0.01%), BHP flat (+0.14%). Not a lot of joy in those numbers, but not too bad either. It looks like another boring day. :)
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