Well there you go. The next trading day after I identify what I thought would be significant support levels they get blown away before lunch. I seem to be continually dropping my subjective soft stop level. I'm glad I'm only holding a relatively small position.
There are three charts shown below. Two daily charts and a weekly chart. The weekly chart is first. When I had a look at it the thing that stood out was the fact hat the huge SP drop back in October 2016 stopped on a high volume down bar at, yes you guessed it, 5.9c. Hence my new support level is 5.9c. In Volume Spread Analysis (VSA) high volume (relative that is) down bars (closing lower) are potential signs of strength (SOS). As you can see back in October 2016 the SP was knocked sideways after this high volume down bar.
The second chart is a daily chart. You can see the brand new potential support level on the chart. Today's wide range down bar was on still relatively low volume (compared to the beginning of the year that is) and put in the lowest LOW since January 2018. Any hard stops that were lingering around at that level would have been taken out today. The close was at the bottom of the bar so it would appear that smart money wasn't prepared to move in on high volume and drive the price back up. All the oscillators are pointing down and the stochastics are all heavily oversold.
The third chart presents the indicator I use to determine whether an SP is in what I call a strong down or up trend, i.e. even though the stochastic oscillators are oversold the SP can still move down strongly and visa versa. When the W%R indicator (third panel from the bottom) colour goes green or red the trend is considered strong. As you can see the down trend is strong and hence an oversold stochastic is considered irrelevant to this analysis. One other observation is that the SP is now almost on the 200MA (orange dotted line on the chart). I've be told that the instos take particular notice of the 200MA. It may provide good support in the future.
This is my opinion only. Today's drop was extended and unusual but only on still relatively low volume. All the oscillators on the chart are pointing down but the short term stochastics are all now heavily oversold. The SP is in a strong down trend. Smart Money (Professional Groups) if they are involved did not step in today. IMO the SP weakness is probably being influenced by seasonal factors including EOFY tax loss selling by Retail Investors. If I was a large holder with a desire to substantially increase my position I would be delighted to see the present SP weakness and would be waiting for the right time this week to start large buying. If the news was in fact bad I would be hoping it is released quickly while the general market sentiment is low. I don't think we will see an announcement this week (now that's a big call - I can only imagine what's going to happen tomorrow).
So there you go. The TA assessment isn't good. Which way the SP goes tomorrow will tell us whether todays selloff is going to continue. Personally I will be happy if the SP manages to stay above 5.9c level and the 200MA at the Close this week. Survival this week may see sunnier days next FY.
