Twenty Leaders +0.8% 50 Leaders +0.7% XJO +0.7% Small Ordinaries +0.7% Financials +0.2% Materials +2.7% Consumer Staples -0.3% Energy +0.8% Health -0.7%
Comment: I really don't know what to make of today. It was Index Expiry Day and a lot of fishy business occurred. Here's an excerpt (2.42 p.m.) from the Sydney Morning Herald:
"Traders suspect that the share prices of a number of major ASX200 stocks - including ANZ Bank - were manipulated when trade opened this morning.
"Mystery trades in ANZ pushed the share price of ANZ up $1.67, or 6.5 per cent, when trading began at 10am.
"ANZ, which closed at $25.79 yesterday, soared to $27.63 per share on the opening bell, before the stock collapsed to $26.16.
"In the first few minutes of trading about a third of the average daily number shares in ANZ changed hands. Large fluctuations hit the share prices of Ansell, Aristocrat and AGL, while Commonwealth Bank and Bank of Queensland also spiked when the ASX opened. . . ."
"The trades were large enough to affect the price of options traded on the S&P/ASX 200 Index - commonly referred to in the investment world as XJO Index Options. The index tracks shares that form the S&P/ASX 200. The XJO Index rose to 4606 on the back of the moves, before settling back to 4575.
"A number of brokers noted that those options expire at the close of trade today. The settlement price for those options will be calculated using today's 4606 opening price of the XJO index."
Volume on the day was elevated - normal for Index Options Expiry Day in Australia.
The market fell rather heavily after being up early in the day. At 11.22 a.m. the All Ords was up 51.6, but finished up 30 points - a fall of over 20 points. That's substantial but not enough to declare a reversal day.
A huge shift occurred out of defensive stocks into aggressives. Despite the market sell-off in the afternoon, Materials remained stubbornly at its highs. Many defensive stocks sold off right from the open today. Usually, that would be considered bullish. But at the extreme top of a trend? Odd. Today was, to put it mildly, a bit weird. The market is now in a parallel universe with quite different laws from those which normally prevail - Cloud Cuckoo Land. (See below.)
Technical Comment on the ASX200:
The XJO finished at 4559.2. The chart finished well above an important resistance level - 4521.8. It is still in a congestion zone. Indicators: Stochastic: 90. Overbought. RSI: 80.6. That's above my "official" Cloud Cuckoo Land level of 80. MACD Histogram. Marginally above zero. Neutral. MACD: Above zero. Positive. CCI: 178. Oveerbought.
The medium term trend is up. The short term trend is up.
Until the 40-Day MA is broken clearly to the downside – bulls will be optimistic.
The chart is also at the top of the Standard Error Channel. It's been a good top predictor since the bull rally began in June. That doesn't necessarily mean we can expect a massive drop tomorrow. But an easing back in the next few days is a high probability.
Redbacka
(Note: I've used a Heiken Ashi chart today instead of the conventional Candlestick chart. They are similar - but HA filters out a little of the noise which contaminates the usual Candlestick chart. Not a lot of difference - but it helps to see more clearly the over all picture.)
(20min delay)