Comment: Another solid down day with breadth (Russell2000) horrible. Volume is increasing steadily. Was last night enough to represent a wash-out? Probably not. But the increase in the New Lows suggests we’re close to a bottom. NewHighs/NewLows 15/837. That’s the highest figure for New Lows since the August lows. So the market is close to a bottom.
The Materials Sector -2.81% and Energy Sector -3.4%. Those figures are poor and negative for the Australian market on Tuesday. All nine S&P Sectors were down. The Financials Sector was the worst, -4.49. The Banking Index was hit hard, -4.78%. Semi-conductors down, -3.67%. The market was uniformly weak.
Interestingly, Copper was down just -0.05%. Relatively flat. In my last two weekend reports, I’ve mentioned that Copper, the bell wether for the economy and mining stocks, should be watched carefully. Last night Copper had a strong reversal day upwards (despite the flat finish). That’s the third in the past six days – on very high volumes. (I’ve marked those days with arrows.) That looks to me like the smart money is starting to buy into the Copper story. If so – asset prices in general are very close to a bottom.
Europe: France -1.85% Germany -2.28% London -1.03%
Gold in U.S. Dollars is up +2.12%. Gold in Oz Dollars is up +3.74%. AUD/USD down, -0.79% to finish at 96.28. The Ozzie is below minor resistance of 97. The 95 zone targetted – and further falls in the Ozzie stock market. EWA (the ETF for Australian shares) down -3.29%.
Technical Comment on the Dow Industrials: The DJIA finished at 10655.3. Now close to the August lows. Below the 8-Day MA. Negative. Below the 34-Day MA. Negative. Indicators: Stochastic: 35.6. Below its signal line. Negative The 8-Day MA is below the 34-Day MA. Negative The 13-Day MA is below the 150-Day MA. Long-term negative. RSI.9 is at 35.7. Oversold MACD Histogram marginally below Zero. Neutral. MACD (zero lag) marginally below zero. Neutral. CCI.9: -141.5. Oversold.
Momentum indicators allow for more downside. Until the Stochastic gets below 20, I doubt we’ll see a rebound. The New Lows figure suggests we’re close to a washout. And the Copper chart also suggests a turn around is near.
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