Comment: Another rugged down day, with volume increasing a little, now 108% of the 10-Day Average. That’s hardly panic selling. We were down strongly early on. Then the market advanced steadily until around 3.00 p.m. when the bulls capitulated and the market turned down to finish poorly.
Technical Comment on the ASX200:
The XJO finished at 4143.7. Below horizontal support at 4180. Indicators: Stochastic: 28.6. Negative. Not yet oversold RSI.9 is at 30.4. Oversold. MACD Histogram. Below Zero. Negative. MACD. Below Zero. Negative. CCI.14: -207.37. Oversold.
I’ll be surprised if we don’t have a positive day tomorrow. Here’s why:
* A major index like the XJO rarely sees a reading below -200 on the CCI without a bounce. It can go to -300, but that is extremely rare. * The Z-Score on the XAO (25-Day reading) today reached -2.8. This is a statistical measure of variation from the mean (basis – 25 days). We’ve only seen readings like this twice before in the past 12-months. Early August, 2011 was a little worse than this. * The AdvancingVolume/DecliningVolume Ratio today was below 0.2/1. Again, we rarely see readings worse than this without a rebound. Again, lateJuly/earlyAugust, 2011 did see worse than this – and we got several readings like this. Well, I suppose this could be like that – but I doubt it. Why? * In the 50 Leaders today, we had eight stocks on the positive side. That’s not too bad a result – usually a fall like this sinks all boats. So I don't think this is like early August, 2011 * No panic selling today on a big day down. Looks like weak hands selling out - strong hands picking up the bargains. * Lastly, Apple Inc had a nice reversal up last night in America. It still needs to show follow through buying – but that was a good start.
We did break below 4180 today on the XJO. I’ve been saying that’s a key level. So – if we get a positive bounce tomorrow – it is what happens after that which will decide the fate of this market. If we fall back lower after that bounce (presuming we get it), then it will be a very bearish development. But if the index can get back above 4180 tomorrow and then hold it. We’re headed back for a test of our old resistance level of 4300.
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