labor and capital - wednesday, page-14

XJO down -0.53%. The only positive S&P Sector today was Consumer Discretionary +0.1%. After that the Consumer Staples and Energy, although negative, were next best. Both down -0.2%. Gold Mining Index was down a little -0.1%.

Chart for the XJO:

All the gains of the Santa Rally have now been given back. The Index is at support – so some sort of a bounce might be in the offing. A measure of volatility that I keep, the Z-Score, is now at -3 Standard Deviations below the mean. That’s the lowest its been since mid-November, 2012. Again – that suggests a bounce is in the offing. Other indicators I keep based on market breadth are still not extreme enough to suggest we’ve reached a really good buying opportunity. So we might get a bounce – but I wouldn’t put a lot of faith in it. The lower edge of the down trending channel still beckons. Like the Sirens to Ulysses it is singing its song, "Come Closer, Sweet Dear."

ANZ (bellwether stock):

ANZ has a large Head/n/Shoulders top formation in place. The Standard Measure Move suggests a fall down near the June 2013 lows. The stock is very oversold – and H/n/S patterns typically have a throw-back to test the neckline before resuming the down trend. So – with an oversold stock – at support – a bounce is likely. If the stock throws back to the neckline and starts to fall again – this market could be in serious trouble. It’s not looking good at this stage.

Redbacka