discount the obvious - wednesday, page-23

Above is a Heiken-Ashi Chart for the XJO.

In Australia today:

50 Leaders -1.4%
XJO -1.4%
Materials -0.9%
Energy -1.7%
Financials x-Property -1.9%
Small Ordinaries -1%
Gold Miners -2.9%
Mid-Cap 50 -1.3%

A big down day. Volume was up a little on the previous two days - but nothing unusual for a Wednesday.

Technical Comment on the XJO (closed at 5319.2):

Indicators

RSI9: 35.7. Oversold.
MACD Histogram. Below zero. Negative.
MACD: Above zero. Positive.
Stochastic: 25.9. Negative.
CCI.14: -264.9. Negative.

CCI is at an extremely low level, which suggests we'll see some consolidation at this level. Stochastic is still not oversold, so there's probably more downside to come - but maybe not in the next couple of days. This is beginning to look like the action in May which resulted in a big pull-back into late June.

I've been expected something of a knee-jerk reaction rally in the Financials in the past couple of days. It hasn't happened. They've continued to be extremely weak. Here's a weekly chart for ANZ - a bellwether stock:

The negative divergences on the Money Flow Index set up ANZ for a fall. I put up an extended analysis of ANZ in the Weekly Report. That indicated we could expect a 4-5 Week pull back in ANZ. We're now into the second week of this pull-back. Indicators have much more room to move to the downside. This chart suggests we're only at the beginning of a pull-back. ANZ is highly correlated with the other Big Four Banks which make up 30% of the XJO. So the XJO looks likely to be weak in the near future. Jingle Bells is not playing just yet.

Redbacka