Frankenstein Wednesday, page-2

XJO down strongly today -0.72%.  STW (tracking ETF for XJO) down a similar amount -0.69%.



STW gapped down at the opening and was weak most of the day.  Some buying came in at the end of the end of the day, with a long lower tail showing on today’s candle.  The STW finished above the mid-point of its daily range which is something of a positive.

STW hit below horizontal support and then bounced.  Another positive.  It closed marginally below the 200-Day EMA.  So we can’t say that XJO has broken below its long term trading range.

Indicators are oversold.  So there’s a possibility that this is as low as the movement goes.  Look for a move back up into the trading range.

The banks continue to be the albatross around the neck of the XJO.  Here’s the chart for CBA:



The range for this pull-back is about the same as the pull-back April/June.  RSI9 is at an extremely oversold level of 17.9.  Anything under 30 is extremely oversold, anything under 20 is almost unheard of in a blue-chip stock.  And that’s where CBA is at this stage.  MFI is showing a potential positive divergence, so a counter-trend move is highly likely.

I think we’ll be up tomorrow and avoid a crash through the lower edge of the trading range.

RB.