Indices: One-Week Performance. XJO - Monthly Chart (for the long-term investor) XJO - Weekly Chart XJO - Daily Chart Small Ordinaries - Daily Chart Gold in Oz Dollars - Daily Chart AUD/JPY - Daily Chart SP500 - Daily Chart Daily Copper Chart Seasonality and Sentiment Advance/Decline Charts A/D Line Relative Strength Summary and Conclusion
INDICES ONE-WEEK PERFORMANCE
XAO: -0.6%. Seven out of ten S&P Sectors were down.
Best (two of three are defensives): Industrials +0.45 Telecoms +0.44%; Utilities +0.09%
Worst: Financials -1.24% Health -1.02% Info.Tech -0.99%
Risk: 50-Leaders -0.79%, Small Ords -0.38%. A little risk appetite evident.
Gold Miners: -2.18% Property Trusts: +0.82%
This is the fourth week out of five that the market?s been down.
MONTHLY CHART - XJO
Only end of month results should be considered with this chart. ATM it looks ominous. But we?re only half way through the month
Currently XJO: the Index remains above the 10-Month Moving Average. Positive.
Fallen below the rising oblique trend line. Negative.
MACD: Above Zero line and above signal line. Positive
RSI: 51.4. Positive.
The CCI.20 has fallen below 100. This may be a leading indicator of further falls.
N.B. Market has been in a sideways consolidation since July 2009.
Major Support and Resistance: 4200-5000
A monthly close above 5000 would be very bullish and complete an ascending triangle pattern. A target for such a break out would be the late-2007 highs. Such a break-out is not guaranteed. And a break-out would not guarantee that the target would be met.
This chart remains positive but shows signs of weakening.
WEEKLY CHART - XJO
Major resistance: 5000. Support: 4500 then 4200 (round figures).
The chart has given medium-term sell signals. Any upward rally is likely to be an opportunity to sell.
DAILY CHART - XJO
Medium term trend is down. Negative.
RSI.14: 40.9. In a region where a rally can be expected. MACD Histogram: below Zero line. Negative. Positive divergence from price. MACD: Below Zero. Negative. Stochastic: 15. Oversold. Look for a rise above signal line and 20 for short term buy signal. Positive divergence from price CCI: -125.9. Needs to get back above -100. Positive divergence from price.
Chart is now in a Zone of Support (see circled area and long arrow.) Likely bounce.
13-Day MA close to crossing below 150-Day Ma. If that occurs while the index chart is rising, the signal is negated. (See March for an example.)
SMALL ORDINARIES - DAILY CHART
13-Day MA now below the 150-Day MA. Negative. Most indices are kicking up from low levels.
The lowest pane shows the relative strength of the Small Ordinaries to the ASX200. Friday?s weakness is a concern - but the chart still shows a positive divergence.
A break lower below major support would be bearish.
GOLD IN OZ DOLLARS
Gold in Oz Dollars (tradable through the Gold ETF) tends to trend inversely to the general market.
Since mid-February it?s been in a sideways consolidation.
MACD: Just above Zero Line. Neutral MACD Histogram: At the Zero line - neutral. RSI: 54.6 and rising. Positive. Above both the 13-Day and 150-Day M.A.s. Positive Stochastic: 55.4 and rising above signal line. Positive. CCI.20: +59.5 and rising. Positive
Major indicators generally positive. A break above 139 area would be bullish for Oz Gold and negative for the general market.
AUD/JPY WEEKLY
This week the AUD:JPY tested the old support at 87.4 as resistance. The chart fell at that point. Negative.
13-Day Moving Average: Below. Negative MACD: Below zero line. Negative. MACD Histogram: Below zero. Negative. RSI: 42.3. Negative Stochastic: 34.09. Below signal line. Negative. CCI -132. Needs to climb back above -100.
The JapaneseYen is one of the major currencies involved in the ?carry trade?. Traders borrow at low rates in their home currency and invest in a country like Australia with high interest rates. When the currency falls, the home country repatriates money as a falling currency negates any gains they can make. This affects liquidity in the country where the currency was invested, e.g., Australia. Liquidity is necessary for the stock market to have a positive investment climate. Currently, this chart is negative for our stock market.
Near term support at 83.4
SP500 DAILY
SPX is sitting on a major oblique uptrend line. The chart remains in a medium term uptrend channel.
13-Day MA. Below. Negative. RSI: 49.8. Neutral. Stochastic: 33. Below signal line and falling. Negative. (going below 20?) MACD above Zero: Positive MACD Histogram below Zero: Negative. CCI.20: +4.08 and falling. Negative.
SPX is sitting on the edge of a precipice. A break below that oblique uptrend line would signal further falls. Plenty of support exists below, so any falls could be muted.
DAILY COPPER FUTURES CHART
Copper is now well below a major support level. It is now oversold.
MACD below Zero. Negative. MACD Histogram below Zero but levelling out. Neutral. RSI: 37.6. Low down in the caution zone (30-40). Could rebound. A break above its down trend line would be positive. Stochastic: 16.2. Oversold. Positive divergence from price. CCI.20. -96.2. Back above -100. That?s a ?buy? signal. 13-Day MA well below 150-Day MA. Negative.
This chart shows a huge rounding top. Negative.
Short term signs indicate a possible rebound. A test of major resistance looks probable.
Copper is a proxy for world economic activity.
SEASONALITY
Seasonality: In the American market the third week of May in the 3rd Year of the Presidential Cycle has been weak. If that plays out this week, then our market will also probably see new lows.
Sentiment: Traders Narrative suggests that the current market sentiment is benign. Not showing a lopsided tendency one way or the other.
For a full report on Market Sentiment go to: http://tradersnarrative.wordpress.com/
ADVANCE/DECLINE CHARTS
The Advance/Decline Line is currently back to the 150-Day Moving Average and the oblique uptrend line.
The AdvVolume/DeclVolume Line is not showing the same weakness. In fact it is still above the February high. This divergence is positive.
A/D LINE RSI
The Relative Strength Indicator for the A/D Line has recently fallen below 30 then risen back above that line.
The last five occurrences (since 1/1/2010) have all resulted in rebounds in the stock market.
That?s a small sample - but difficult to ignore.
SUMMARY & CONCLUSION
TRENDS: - XJO: monthly chart - below up trend line. Wait till end of the month to determine direction. Still above the 10-Month MA. Positive. In a very long term sideways consolidation. (The one chart IMO the long-term investor needs to look at.) - XJO: weekly chart - Down. Below 13-Week MA. Stochastic below 80 and continues to drop. Fairly reliable medium term bear signal. - XJO: short term - down. At support. Oversold. Due for a relief rally. - SP500: Short term - down. At a major oblique uptrend line. A break below that would probably see more selling. - Small Ordinaries: Improved this week against the ASX200 but Friday was again very weak. Caution. - AUD/JPY: Off from Multi-year highs. Below major support. Caution for our stock market. - Gold in Oz Dollars: Medium term - sideways consolidation. Short term up. Caution sign for the general market.
XJO currently at 4725.8
Major Support and Resistance for XJO: Resistance: 5000; Support 4200 . Mid-point 4600.
Copper - medium term down trend. Broken below major support. Oversold - looking for a bounce.
Seasonality - 3rd week of May in the 3rd Yr of the Presidential Cycle (American market) has been weak.
Market Sentiment is generally benign. Neutral.
Advance/Decline Line: At 150-Day MA support
AdvancingVolume/DecliningVolume line - positive divergence from A/D Line.
A/D Line RSI - oversold - suggests a relief rally and possibly and intermediate bottom.
The Australian market sold off modestly this week. We?re probably at a short term bottom but in the medium term considerable technical damage has been sustained by the market.
The Australian market has dislocated from the American market. We?re in a medium term down trend channel while the American market is in a medium term uptrend channel (albeit at the lower end of that channel). If the American market breaks lower below that channel as the seasonal conditions suggest, then our market could see further falls this week. I think we?ll be higher by the end of the coming week, but I?m not comfortable with that call given the American market conditions. The next couple of days may be crucial.
For daily updates - check http://redbackmarketreport.wordpress.com/
(20min delay)