Above is a Candle Stick Chart for the XJO.In Australia today: 50...

Above is a Candle Stick Chart for the XJO.

In Australia today:

50 Leaders -0.8%
XJO -0.9%
Materials -1.1%
Financials x-Property -1.1%
Small Ordinaries -1.4%
Gold Miners -1.4%
Mid-Cap 50 -1%

Today was a strong down day. Volume was affected by public holidays in NSW, SA, QLD and ACT.

Technical Comment on the XJO (closed at 5161.1):

Indicators

RSI9: 36.4. Oversold.
MACD Histogram. Below zero. Negative.
MACD: Above zero. Positive.
Stochastic: 15.7. Oversold.
CCI.14: -180. Oversold.

The market is oversold and at support of the horizontal support line from mid-March and mid-August. We could easily get a bounce here. Some technical damage has been done. We’re now down below the 40-Day TMA. Any bounce is likely to be sold into.

A break down of the current support level brings into focus the much more important 4980 level and the 150-Day TMA. I’d expect those to hold. But that’s jumping the gun. Let’s see how we progress from here. Currently the short term trend is down and the medium term trend looks like it is over. But we are at support.

Below are charts for the two biggest stocks on the Australian market, CBA and BHP.

Both are showing large (somewhat sloppy) double tops. CBA is just above critical support. BHP has broken marginally below critical support. (Marginal isn’t good enough.) Any further breakdown and these stocks are headed for much lower levels. And if these two break down, there’s not too much hope for the general market.

They may, of course, be in a trading range - in which case, we can expect them to head back to the top of their respective ranges. No need to feel catastrophic ... yet. I am, however, getting in a supply of tinned beans and checking the condition of the old tin hat.

Redbacka