Cartoonist Thursday, page-2

Wednesday Evening Liqueurs. 4 May, 2016.

XJO down today heavily -1.58%. That still didn't erase the previous big up day yesterday of +2.1%.

Today was the day after the federal budget and it's as if that event didn't happen. Today was dominated by international events, the Reserve Bank interest rate cut and stock specific events.

Here's some of those events affecting our market today:

• SP500 was down last night -0.87%
• US$ was up +0.29% on very heavy volume
• The upside in the US$ sent commodities in a tizz, Base Metals down -1.98% and Energy down -1.3%
• The RB interest rate cut sent the Ozzie Dollar down -2.37% and that negatively affected Bank stocks
• BHP fell nearly -10% after notice of a huge claim for compensation from the Brazilian government,
• WOW fell -7.01% after its poor report the previous day, and the announcement of a credit down grade didn't help.

It wasn't all doom and gloom. Some stocks benefit from a falling Ozzie Dollar. CSL is a classic example. It was up today +1.75% and finished at 111.37, a new 52-Week high. Interest rate sensitive stocks like AGL also benefitted, up +0.32%. Property Trusts Index was up 0.38%, also another new 52-Week High. Utilities Sector (which includes AGL) was up +0.87%, also another new 52-Week High.

Here's the chart for STW (ETF for XJO):



Despite the big loss today, it only appears as an "inside day" on the chart. That usually equates to an indecisive day on the market.

There are plenty of negative divergences on the chart. The most obvious is the negative divergence on the MFI. There is also a small negative divergence on the CCI which is usually reliable.

The chart has paused at horizontal resistance and not far off the top of its rising channel.

All this suggests we'll see more downside. It's possible we'll see a fall back to the lower edge of the rising channel. But I think we'll see support come in before we see those much lower levels.

We'll see a pull-back, but probably not of catastrophic proportions.

RB