weekend charting 13/14 feb, page-49

I see a few requests for a couple of the financial stock - ANZ, MQG, etc. I've been following ANZ (given up on NAB until the AXA thing sorted) but the downtrend in financials continues to weigh on my thinking. For the broader perspective I've had a look at the financials (XFJ) and compared its performance to the XJO and the other main component, the XMJ. For me the picture is quite clear as to where the two sectors are heading relatively speaking and before we see the sometimes-talked-about rotation out of resources into financials I think we need to see some evidence of a reversal in financials. FOr the best comparison I've kept the (daily) charts full size:

The 1st chart shows that from October the XJO had trended upwards somewhat, but of course broke down mid-Jan. While we had a bounce off the low 4400's, its a lower low so the bottom is not necessarily in.

Compare this to the next chart which is the XMJ. Here we see a much strong bullish trend right through to mid-Jan where the market began its retrace/correction. I find it noteworthy that the two lows we've seen in the XJO on the downtrend actually form more of a double-bottom on the XMJ - a more positive sign for resources imo as probably leading the market out of the current downtrend.

On the other hand, the XFJ in all the above respects is almost opposite. Its' been trending down since October, and this weeks consolidation around the 195 EMA is possibly only the 1st low since the market retrace/correction began, and its not even confirmed as a low yet (i.e. it hasnt yet really advanced clearly into a swing top of any kind).

The message to me is that while some of the banks are starting to look attractive compared to where they were in October, the trend says they may yet become more attractive, so while waiting for any sort of confirmed signs of that, the resources sector is a more attractive area to be trading imo.





Cheers, Sharks.