mongombolo's - curious child thursday, page-87

XJO (ASX200) -0.3%
XTL (Twenty Leaders) -0.3%
XFL (Fifty Leaders) -0.2%
XFJ (Financials) -0.3%
XMJ (Materials) +0.1%
Energy -1.5%
XSO (Small Ordinaries) -0.2%

Comment: The market was down a little today. Volume was up a little on the past two days – but less than Monday. Monday is typically the lowest volume day of the week, and Thursday is usually the highest volume day. So there was a bit of an increase in activity today, but not particularly significant. The Small Ords were more or less in line with the market. The Advance/Decline Ratio just nudged into bullish territory. But there’s nothing much in any of that. The market continues with its sideways action.

Today was a narrow range day – inside the range of Wednesday, which was inside the range of Tuesday. The market is displaying “nesting” action – often seen before a big move.

INDICATORS:
RSI.9: 59.3. Positive.
MACD Histogram. Above zero. Positive. But falling.
MACD . Above zero. Positive.
Stochastic: 83.8. Overbought.
CCI.14: +85.2. Below +100 and falling. Negative.

The short-term trend is undecided. The Index closed at 4280.7. For the past four days, the Index has hugged the major down trend line.

I can’t imagine a better example of why Technical Analysis is of importance. Clearly the Index is at an inflection point. Future direction will be decided by events out of our control – in Europe. But the reaction of the markets to those events will be clearly signalled in the charts. A big down day on volume will be bearish. A big up day on volume will be bullish.

I don’t pretend to know what will happen. But the reaction of the market should provide a clear “buy” or “sell” signal.

Watch this space.

Redbacka.