Comment: Yesterday I said that this rally isn’t looking convincing. Well, after last night, my pessimism has intensified. A narrow range day on low volume at the 34DMA – recently such events have resulted in a retracement soon after.
Is it different this time? Maybe. This short term rally has come off indicator divergences and from an intermediate low. So a pull-back might occur – but might not be as much as the bears expect. We shall see.
Yesterday I also mentioned that the Jobs Report had the potential to move the market. Well, the Jobs Report was a fizzer. Unemployment remained steady. Initial Jobless Claims rose but less than expected. So the market ignored the report. Just to show the market couldn’t give a fig about news, Spain and Italy debt was down-graded, but it didn’t send the market into a spin. Maybe down a bit – but not a death spiral.
NewHighs/NewLows 9/32. Until we see NH>NL (and by a big margin), the health of this market remains in doubt.
The Materials Sector -1.52% and Energy Sector -1.23%. Copper was down -0.7%. Those figures are weak and negative for the Australian market on Friday. Only one of nine S&P Sectors was up with Financials the worst, -3.59%. Maybe the news about the debt downgrades did have an effect.) The Banking Index was down, -4.31%. Semi-conductors up, +0.44%. (One of the few bright spots in the market indices.)
Europe: France +0.66% Germany +0.54% London +0.23%
Gold in U.S. Dollars is down -0.7%. Gold in Oz Dollars is down -1.04%. AUD/USD up, +0.27% to finish at 97.84. Above minor resistance level around 97.
EWA (the ETF for Australian shares) up +0.61%. Sometimes EWA leads the Ozzie stock market, sometimes it follows. That’s a disappointing up figure for the EWA after a big up day in Australia and a modest up day in the AUS/USD. That suggests the Australian market will be under considerable pressure on Monday.
Technical Comment on the Dow Industrilas: The DJIA finished at 11103.1. Back above 11000 – the oscillation mid-point for the past two months. Above the 8-Day MA. Positive. Below the 34-Day MA. Negative. Indicators: * 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 52. Above 50. Positive. * MACD Histogram marginally above Zero. Neutral. * MACD (zero lag) marginally above zero. Neutral. * CCI.9: +16.9. This is now in the critical zone – rejection around the zero area would be negative.
RSI and Stochastic have turned positive. We need to see a strong move above the 34DMA. In the short term, I don’t think that’s going to happen.
This market is stalling at the current level on weak volume. The extent of the expected pull back will be decisive. A new low would be bearish.
For the bullish case, I still want to see a positive 8/34 MA x-over before I’m convinced.
Long term, the market needs to get above resistance at around 11700.
(20min delay)