Banks sink the ship. Tuesday Evening Liqueurs. 11 August, 2015.
XJO down -0.65% on average volume.
The Index remains at the lower edge of its recent range. Indicators are oversold, so the odds suggest a move to the upside rather than the downside.
Last night, the overseas markets were very strong - and commodities were also very strong. Our market started moving up from the opening but that quickly gave way to strong selling.
The following daily sector performance chart shows just where the strengths and weaknesses existed:
It's clear that the Miners and Energy were very strong - following on from strong commodity prices overnight. But the rest of our market was weak. Financials, Health, Industrials and Utilities were very weak.
Our banks remain in shaky conditions.
Here are charts for the four banks - they hold the keys to our market's direction.
CBA (reports tomorrow):
Back in late March, CBA was close to crossing above the magical $100 per share mark. Now it is threatening to fall below $80. The $80 mark is around the 100-Week MA. A move below that would be very bearish.
The stock is oversold. The Money Flow Index is showing a good positive divergence - so the odds favour the upside.
Tomorrow's report could change the complexion of the chart in a radical manner.
NAB (reported yesterday):
NAB reported yesterday and bounced nicely. It looked as if the market was positive on the report. That all changed today with the stock down -2.58%.
Back in April, NAB was poised to burst through $40 - now it looks likely to break through $32.
The stock is oversold. And at support. It could go down to $32 - but I doubt that will break. But we'll have to play it if that happens.
ANZ:
ANZ is the culprit in the recent Black Swan events for the bank. It fell heavily after its capital raising.
It is now down to support and very oversold with an RSI9 at 25.9. That is very low so the odds favour some sort of a rebound. Of course, after such a fall, it would not surprise to see an RSI sub 20.
After such a big fall, it would be unusual for it to revert quickly to the upside. A period of base building - with, perhaps, some more downside, seems likely. Don't expect a quick recovery after such a big fall.
WESTPAC:
Like the other big banks, Westpac had a big downside fall today -1.93% after opening on the positive side.
It is oversold, so the odds favour a move to the upside.
Of the four big banks, ANZ is the only one to fall below its June lows. The other three are still above that bench mark.
ANZ has been the catalyst for the current falls, and is suffering the most.
The other three have fallen in sympathy.
The future for the three (CBA, NAB, WBC) seems to lie tomorrow when the CBA reports. And with it probably lies the future of our market.
In the meantime - the Miners and Energy just might mitigate against any catastrophic falls.
(20min delay)