Twenty Leaders -0.3% 50 Leaders -0.3% XJO -0.3% Small Ordinaries -0.5% Financials -0.4% Materials -0.3% Consumer Staples -0.4% Energy +0.4% Health +0.7%
Comment: A modest down day on average volume (98.6% of the 20-Day Average). The market was down moderately early in the day, managed a desultory rise from about 11.00 a.m. to 1.00 p.m., then basically drifted sideways (with some ups and downs) till the end of the day. At 1.00 p.m. the All Ords was down 12.2 points; it finished down 14.7 points. About square for the afternoon trading. Overly optimistic bulls would take heart in the relatively small drop today.
Breadth as measured by the Small Ords was again relatively weak (but not dreadful). It did, however, sell off relatively sharply in the last 50 minutes or so. Below is the XSO chart which shows it has broken below near term support. XJO is still above. That’s a negative divergence – a warning sign. Short term the chart is close to a complete sell signal. (Horizontal and oblique up trend lines broken to the down side. Most momentum indicators breaking below critical levels.)
On a slightly longer time scale, the chart pattern is a rising wedge which often breaks lower. The rising wedge and negative divergence on the MACD Histogram makes this index susceptible to a sell-off. Small Ords often lead up and down.
Technical Comment on the ASX200: The XJO finished at 4490.7. Support 4437.7. Resistance 4521.8. Indicators: Stochastic: 91.5. Overbought. Below its signal line. RSI: 69.9. Breaking below 70. Caution. MACD Histogram. Marginally above zero. Neutral. MACD: Above zero. Positive. CCI: 90.3. Falling below +100. Negative. CCI is often early to the party..
The medium term trend is up. The short term trend is up. Respect the trend. Until the 40-Day MA is broken clearly to the downside – bulls will be optimistic.
The chart is close to giving a simple short term sell signal. CCI, Stochastic and RSI have broken below critical levels (if only marginally). The full brace of signals will occur when those three are joined by the MACD Histogram and a break of the uptrend line. When I add all that to the negative message being given out by the Small Ords, I think this is a time for the bulls to be very cautious.
(20min delay)