Tuesday Night Liqueurs.26 April, 2016.
XJO down today about -0.3%. That continued the gentle slide-down we saw last Friday. This pull-back is not looking dramatic at this stage.
Following is the STW Chart (ETF for XJO):
Negative divergences on DPO and MFI suggest we'll see more down-side. The relationship between the short term stochastic and the long term stochastic suggest that this pull-back will be bought.
The weakest sector today was Materials -2.1%. Next worst was Energy -1%. If you remember from my Weekly Report on Sunday, these were the best two performers last week. So we're seeing the usual reaction in these two against out-performance. The question now is: Will this pull-back result in a reversion to the long-term down-trend?
Here's the chart for Energy (XEJ):
Last Thursday's big up day took the index right up to the 200-Day MA. Friday and today have seen small drops from that important marker.
So - the current two-day pull-back is not unexpected.
Some indices were also overbought - so, again, some pull-back is not unexpected.
The relationship between the short term stochastic and the long term stochastic suggests that a pull-back will likely be bought. The long term stochastic is still rising so that suggests that the uptrend is intact. So any short-term pull-back is likely to be bought.
That's a positive for the broad market.
RB.
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