lez tork strine, page-94

In Australia:

XJO +1.1%
Twenty Leaders +1.2%
50 Leaders +1.5%
Financials +2.1%
Materials +0.5%
Small Ordinaries +0.3%

Comment: A strong day on much higher volume than the previous two days. The market was quite lopsided today. 50 Leaders up 1.5% while the Small Ords were up just 0.3%.

Strong up day, on strong volume with anaemic breadth – that does not add up to a bullish market.

Technical Comment on the ASX200:

The XJO finished at 4271.3. Sitting above the 15-Day MA and marginally above the 150-Day Moving Average.
Indicators:
Stochastic: 86.7. Overbought. Below its signal line. Caution
RSI.9 is at 66.5. At a level where reversals can often occur.
MACD Histogram. Marginally below Zero. Neutral. Negative divergence.
Caution.
MACD. Above Zero. Positive.
CCI.14: +118.2. Above +100 (overbought). Negative divergence from price.

The indicators are flashing plenty of amber warning signs.

The market appears to be topping. We still need a solid down day to confirm.

You can see from the above chart just how important the current level is. Since early May 2011, the major down trend line on the chart has proved to be be an impenetrable wall for the XJO. That is coincident with the 150-Day EMA. A double whammy resistance. If that breaks to the upside, then we can look to the next stop at 4350.

At this stage, the probabilities lie to the downside.

But – the medium term trend is sideways, and the short term trend is up. A break below the low of Friday would turn the short term trend down.

Respect the trend.

Redbacka