Risk: 50-Leaders +0.4%, Small Ords -0.01%. Risk Aversion dominant.
Gold Miners: +0.03%
Property Trusts: +1.68%
This week broke a run of three down weeks. The picture is not one, however, of a robust market.
MONTHLY CHART - XJO
Only end of month results should be considered with this chart. ATM it looks ominous.
Currently XJO: the Index remains above the 10-Month Moving Average. Positive.
MACD: Flat - just above Zero line and above signal line. Neutral RSI: At its mid-line. Neutral. Slow Stochastic below its signal line and heading down. Negative.
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 - XAO
Major resistance: 5065. (5000 on XJO chart) Support: 4650 then 4350 (round figures).
The chart gave plenty of warning of a medium-term change in trend. No sign yet of a change to the upside, except - that last candle is bullish, technically known as a ?piercing pattern candle?.
DAILY CHART - XAO
[Short term trend is up. Positive.
RSI.9: 47.1. Positive divergence. Needs to get over 50 to confirm short term trend change.
MACD Histogram: Above Zero line. Positive. Positive divergence from price. MACD: Below Zero. Negative.
This chart is positive in the short term and gave an initial ?buy? signal on Thursday. Needs confirmation of RSI.9 moving above the mid-line and the chart breaking above the 4850 resistance area.
GOLD IN OZ DOLLARS
Gold in Oz Dollars (tradable through the Gold ETF) tends to trend inversely to the general market.
This chart is ambiguous. Is it in a coiling symmetrical triangle or a gently falling down channel? The art of tea leaf reading?
Indicators are in non-trending mode - look particularly at the MACD which is now flat.
A break upwards would be positive for Oz Gold (target around 144) and negative for the general market.
Watch this space.
AUD/JPY DAILY
This week the AUD:JPY once again is testing major horizontal resistance.
13-Day Moving Average: Above. Positive
Momentum indicators (MACD Histogram, RSI, CCI) all show positive divergence from price.
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 around the 85 area then the 83.5 area.
SP500 DAILY
SPX has tested a major horizontal resistance level and been rejected. Negative.
13-Day MA. Below. Negative. RSI.9: Back below 50. Negative. MACD (7,18,9) Below Zero: Negative MACD Histogram below Zero: Negative. CCI.14: -72.2. Needs to climb above down trend line.
Bulls won?t take much heart from this chart which remains negative.
DAILY COPPER FUTURES CHART
Copper is now at resistance of the down trend line from April 2011.
Momentum Indicators gave good warning with positive divergence of a trend change to the upside. No negative divergences currently exist.
Chart now above the 13-Day MA. It crossed that hurdle in emphatic fashion. Positive
In the middle of the Bollinger Bands. That?s where new trends often peter out. Combine that with the resistance of the down-trend line and we have a caution sign. My guess: perhaps some consolidation here before an attempt at major horizontal resistance around the 4.2 area.
Copper is a proxy for world economic activity.
SILVER
These two graphs have an awesome similarity.
Silver traders might have a small bull window open to them now.
But, imho, they?d better be quick on their feet.
SHANGHAI WEEKLY
Shanghai is in a very long-term symmetrical triangle.
MACD Histogram is showing typical coiling action with lower highs and higher lows.
The CCI.14 is now below -100. Into oversold territory. A rise back above -100 would be bullish.
Shanghai is a key indicator of the health of the Chinese economy. A break lower from the triangle would be bearish for the Australian economy and market.
RATIO CHART BONDS/COMMODITIES
The CRB:Bonds ratio is a key indicator of the fundamental views of important market participants. Bonds are a safe haven in times of economic uncertainty. Commodities, although subject to occasional speculative activity (e.g., silver, oil), tend to be governed by fundamentals of supply and demand (economic activity).
After suffering strong falls through April into May, momentum is showing positive divergence and the ratio is at a key support level.
The ratio is currently hovering around the 150-Day MA. A key marker between bull and bear markets.
A rise by this ratio above the 13-Day MA would be bullish for the general stock market. That looks probable.
SEASONALITY, SNIPPETS & WEIRD STUFF (PUETZ)
In the American market the week before Memorial Day in the Pre-Election Year of the Presidential Cycle has been neutral.
May tends to be a weak month. With June and July generally strong.
May 19 - Bloomberg (Sarah McDonald): "Australian companies plan to boost bank borrowing from a 14-month high to fund expansion and acquisitions as a mining investment boom drives economic growth. Firms will increase loans from Australian lenders by 60% to A$259 billion ($276bn) in the six months to October...?
May 18 - Bloomberg (Simon Kennedy and Rich Miller): "Investment spending in emerging markets is outpacing expenditures in developed economies for the first time, as a surge in infrastructure supports global growth and profits at companies from Siemens AG to Caterpillar Inc. The 'biggest investment boom of recent decades' will help boost expansion worldwide about 4% this year and next, compared with a long-run average of just below 3%, according to Michael Saunders, Citigroup Inc.'s chief European economist. International Monetary Fund data show investment will top 24% of global gross domestic product in 2012, the most in more than two decades, and then rise above 25%, the highest since records began 30 years ago.?
From The Amalgamator: Puetz Crash Windows?Stock market crashes occur near full moons, and the greatest number start after the first full moon after a solar eclipse, when that full moon is also a lunar eclipse. Specifically, from 6 days before to 3 days after a full moon that occurred within 6 weeks of a solar eclipse.?Puetz studied the eight greatest crashes in financial history and "discovered that all eight crashes occurred six days before to three days after a full moon that occurred within six weeks of a solar eclipse.?Puetz crash windows 2011:?Jun 9-Jun 18Dec 4-Dec 13
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 mid-line and continues to drop. Fairly reliable medium term bear signal. - XJO: short term - up, needs further confirmation. Needs the RSI.9 to get above 50 and for a higher high to form.. - SP500: Short term - down. At a major oblique downtrend line and failed yesterday at major horizontal resistance.. - AUD/JPY: Below major support. Caution for our stock market. - Gold in Oz Dollars: Medium term - sideways consolidation. Wait and see break from symmetrical triangle.
XJO currently at 4732.2 Major Support and Resistance for XJO: Resistance: 5000; Support 4200 . Mid-point 4600.
Copper - short term trend is up. Medium term down trend may be ending. Shanghai - in a long term consolidation. (Symmetrical triangle.) Commodities:Bonds. Medium term trend - down. May have ended. Break above 13-Day MA is needed.
Seasonality - Week before Memorial Day in the 3rd Yr of the Presidential Cycle (American market) has been neutral.
June and July in the 3rd Yr of the Presidential Cycle tend to be bullish.
Puetz Crash Window 9-18 June. (A possibility not a prediction.)
Borrowing activity by Australian miners and predictions of world economic growth are supportive of further gains in our stock market.
The Australian market rose modestly this week. The medium term down trend may have ended. The last weekly candle was bullish. Further confirmation needed (see above). World Indices I look at are indecisive (Shanghai, Commodities:Bonds Ratio, Copper, Oz Gold). AUD/JPY has weakened and hasn?t shown a definitive move back to the bullish side.
Last week I felt sure that the market would have something of a rebound. This week, I think I?ll stand aside for the time being and let the market direction become clearer. I may not have long to wait.
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