Day Report. Oz Market, Monday, 4 January, 2016.
Here's the chart for the XJO as at close today:
Today, the XJO finished down -0.48% and experienced serious intra-day selling after being at its highest level since 30 October soon after the opening bell.
The chart is in a sideways trend for over two months.
But the Santa Rally was strong and sustained. From 17 December till 30 December, the XJO made up +8.36%.
After such a strong rally, a pullback is not unexpected. Indicators are at the top of their ranges. It would be unusual to see the Index go higher under these conditions.
The pull-back might come back to the major horizontal support level at 5152 - a bit more than 2%. If the Index falls more than that, it could be in serious trouble.
While the XJO was down moderately -0.48%, the internals were not so pessimistic.
50 Leaders -0.6%, but the Mid-Cap 50 was down only-0.2%.
ThThe big problem today was in the Financials, down -1%. Since they make up nearly half the Oz market, you can see how the XJO figure has been tilted to the downside.
Advances/Declines 50.68%.
But UpVol/DownVol was a healthy 65.4%.
So I wouldn't be too concerned about the fall in our market today. We're due for a pullback, and the Financials are doing the job.
If you want something to worry about, it's in the chart below:
Above is the chart for the XXJ (Financials, X-Property).
It's now hit the top of the Standard Error Channel and the 200-Day MA. A pull-back is almost guaranteed under such conditions. How far? I don't know. If it is relatively minor, then the big down trend from early 2015 is probably over. The recent break above resistance (big red line on the chart), suggests we've seen the worse. But it wouldn't take much for this chart to break back below that level and head down to the lower edge of the current range.
We now have to wait and see how serious or otherwise the pull back transpires.
Happy New Year to All My Readers.
Redbacka
(20min delay)