What an array of goodies we have before us this week when looking at the markets.
I can honestly say that in all the years I have been trying to analyse markets, I have never seen an index crawl up my wall like the XJO has been doing since the low in November – very little variation either side of a mid-line. It is the largest unbroken rise in the 3x20 P&F chart of the All Ords since the topside breakout in our market in 2004. Had some bigger unbroken falls during the GFC. But keep in mind that I mentioned the breakout of our market in 2004 because I have mentioned previously that I could see quite a few similarities in our market with the 2004/5 period.
However, regardless of this there are many other points to mention:
. The Dow is not keeping up with the SPX.
. The SPX formed a very neat little diamond pattern over a period of a couple of weeks. Has broken topside and almost met the target from that pattern.
. The New York market has formed a series of upslanting wedges within wedges – the biggest dating back to the 2009 low (the most important) down to a very latest covering only the 30 minute chart from the most recent low at 1495. Upslanting wedges are potentially bearish.
. Fewer stocks in the SPX 500 are now above their 50 day moving average than three weeks ago.
. Indicators on the A/D in New York are not confirming the high in the SPX.
. The NASDAQ is back up testing last year’s high despite Apple being more than two hundred dollars lower – obviously a plus – but unfortunately looks to be forming a head and shoulders top.
. Russell 2000 (my chart for 2013) is up 20% from its November low. Its individual indicators have not given a sell during this time but starting to look a bit weary.
. During this market cycle the ratio of the SPX to the US Dollar has been trending higher (SPX outperforming the Dollar). This week the SPX has continued higher but the ratio of these two markets looks to be rolling over.
. Canada looks to have hit a brick wall while we have continued on. Not always a perfect match but I don’t like ignoring it. The other resource market I follow, Brazil, has hit more than a brick wall....
. Dax has been one of the top performers since the 2011 low but it has not carried on with the job this past few weeks and looks to have formed a top pattern.
. There has been continued rotation in our leading stocks just enough to carry on taking our index slightly higher most days. Too many stocks are getting extended now. I know I wrote in October about the possibility of a vacuum in our market above the lower base but it looks to me that we have now jumped above that vacuum level.
. A headline this week “The Bulls Are Back”. It was only October when I was citing headlines from brokers complaining about how bad business was.
. Commodities are a mixed bag – Gold has been trending lower and yet up until last week platinum was testing its highs of the past two years. They normally move together. And copper – it has been trying to break topside.
Whereas previously it was difficult to make a bearish argument for markets in the first half of this year, I am concerned on New York that what we might be seeing is the first part of a topping process which could obviously take some time to complete. Perhaps something like a correction here, followed by a new high and then major failures. But this would still fit nicely with a major low in October as mentioned before.
Longer term, the Aussie market still looks a lot better than the US. Is this the Asian influence that I mentioned many times
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