Indices: One-Week Performance. XJO - Monthly Chart (for the long-term investor) XJO - Weekly Chart XJO - Daily Chart Ratio Chart: Small Ordinaries/50 Leaders Gold in Oz Dollars - Daily Chart Ozzie Dollars - Daily Chart SP500 - Daily Chart Nasdaq - Daily Chart VIX Daily Copper Chart Weekly Silver Chart Seasonality and Sentiment Summary and Conclusion
INDICES ONE-WEEK PERFORMANCE
XAO: +1.14% Nine out of ten S&P Sectors were up.
Best (two out of three are defensives): Health 2.2%; Financials +2.9% Utilities +2.02%
Worst: Information Tech -0.47%; Materials +0.23% Consumer Disc. +0.73%
Risk: 50-Leaders +1.34%, Small Ords +0.9%. Risk Aversion dominates.
Gold Miners: +1.9% Property Trusts: +1.8%
Despite the moderately strong week, the sector analysis provides no great comfort with strength in Defensives and Big Caps and relative weakness in the Miners and Small Caps.
MONTHLY CHART - XJO
XJO: With one week left in April, the Index remains above the 10-Month Moving Average. Positive. Chart remains above the rising oblique trend line. Positive. MACD: Above Zero line and above signal line. Positive RSI: 56.9. Positive.
A leading indicator of a bearish break lower would be a fall by the CCI.20 below 100.
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. For long-term investors this is the only chart they need look at. (Just my opinion.)
WEEKLY CHART - XJO
Major resistance: 5000. RSI.14: 57.6 Above mid-line. Positive. Negative divergence from price. MACD Histogram: Above Zero. Positive. MACD: Above Zero and above signal line. Positive Stochastic: 87.2. Overbought. Caution. CCI.20: Dropping below 100. Caution. Chart is above 13-Week Moving Average: Positive
This chart remains positive - several cautionary signs.
DAILY CHART - XJO
Short term trend is now up (above 13-Day MA). Positive.
RSI.14: 58.6 and rising. Positive. MACD Histogram: At Zero line. Neutral MACD: Above Zero. Positive. Stochastic: 40.4 and rising. Still below its signal line. Needs to break above signal line.
Volume. Very light last six days (below the 50-Day Av.) Average Daily for past six days: 1033.5M. Is this an Easter effect? Six days before Easter in 2009: 1272.5M. In 2010: 1347.4M. No - this is not an Easter effect. This suggests low demand. Caution.
Last two days have been strong up days. Momentum suggests more upward movement.
RATIO CHART - XSO/XFL
Relative to the 50 Leaders (XFL) the Small Ordinaries have been weakening since the beginning of the year.
A cross by the 13-Day MA above/below the 170-Day MA on the ratio chart has been a crude timing mechanism for the long term investor.
The 13-Day MA has crossed marginally below the 170-Day MA. Caution.
Look to other indications for a sell signal.
GOLD IN OZ DOLLARS
Gold in Oz Dollars (tradable through the Gold ETF) tends to trend inversely to the general market.
MACD: Just above Zero Line. Neutral MACD Histogram: Just above Zero line - neutral. RSI: 50.3. Neutral. Just above 13-Day MA but dropping. Caution Stochastic: 76.7 and dropping. Caution. Close to crossing below its signal line. Caution. CCI.20: 35.13. Below 100 and dropping. Negative
Major indicators are either neutral or negative. Caution.
If this kicks back up it would be negative for the general market.
OZZIE DOLLAR
After breaking out to multi-decade highs, Oz Dollar has risen to finish the week at 1.0736 U.S. Dollars.
13-Day Moving Average: Above. Positive MACD: Above zero line. Positive. MACD Histogram: above zero but showing a negative divergence from price RSI: 71.52. Above the overbought line of 70. Caution. A break back below 70 would be negative. Stochastic: 93.2. Overbought. Caution. CCI - above 100 - positive. A drop back below 100 would be bearish.
Support: 1.05 area then 1.02 area
A strong Ozzie Dollar is needed to support further rises in the Australian Stock Market.
SP500 DAILY
Medium Term Short Term Trends remain UP
RSI: 60.2 and rising. Positive. Stochastic: 71.7. Above signal line and rising. Positive. MACD above Zero: Positive MACD Histogram above Zero: Positive. Chart above 13-Day MA. Positive. CCI.20: 98 and rising. Positive.
Major support and resistance 1260-1340 (rounded figures). Index currently at 1337.4.
Further upward movement likely then look for a pause before future direction established
DAILY NASDAQ CHART
Short term trend is up (above 13-Day MA) within a long term sideways consolidation. Resistance at the 2400 area.
RSI: 64.1. Into the ?caution? zone. MACD Histogram above Zero. Positive. MACD above Zero and above its signal line. Positive. Stochastic: 81.3 - Overbought. Caution. CCI.20: Above 200. Very overbought. Danger.
Last four days have shown a strong impulsive up move. 2400 looks likely.
Last candle (stumpy, reversal down from open on high volume) looks bearish. Wait for confirmation on the next day.
VIX INDEX Market's expectation of stock market volatility over the next 30 day
VIX gauges fear and complacency in the market about future direction. It usually trends inversely to the broad market. Highs in the Vix occur at market lows, lows in the vix don't necessarily occur at market highs but are a warning sign.
Last two days completely outside the Bollinger Bands. Most unusual, Mama. RSI: 27.08. Below 30 - expect a reversal upwards. MACD: Below Zero Line - Negative. Positve for market MACD Histogram: below Zero line. Negative. Positive for market. Divergence suggests a possible reversal. Stochastic: Oversold. Caution CCI.20 below -250. Expect a reversal.
Extreme complacency is rarely rewarded by the market. This chart is registering extreme complacency. Caution.
DAILY COPPER FUTURES CHART
Copper is in a downsloping channel.
MACD close to Zero. Neutral. MACD Histogram close to Zero. Neutral RSI: 54.9. Positive. Stochastic: 41.8. Above signal line and headed up. Positive CCI.20. 48.4 and headed up. Positive Above 20-Day MA. Positive.
Copper is a proxy for world economic activity.
Currently heading up to the top of the channel.
SILVER
This chart shows Silver over the past four years. This commodity is clearly in an exponential rise and now at the top of a wide Raff Regression Channel. All major indicators are at extreme overbought levels.
Volume suggests that this is now in a speculative bubble. Such bubbles invariably ended badly. But - until they burst they keep going up. There's no knowing how far.
Bursting of speculative bubbles usually occur along with major reversals in the stock market. Again - not a one to one correlation in time - use other indicators.
Note: This is a weekly chart not a daily chart. As a daily chart it would be scary. As a weekly chart -- what?s worse than scary? I dunno - but this is worse.
SEASONALITY AND SENTIMENT
SEASONALITY: In the American market the last five days of April in the 3rd Year of the Presidential Cycle have been neutral. In all years its been slightly negative.
SENTIMENT: On most measures sentiment is extremely bullish. (That confirms the VIX reading). Contrarians take that as a possible sign that the market is topping.
TRENDS: - XJO: monthly chart - UP. 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 - UP. Above 13-Week MA. Stochastic at overbought. Caution. - XJO: daily chart - up. Light volume puts question mark over the current rally. - SP500: medium-term and short-term - Up. - Nasdaq: short-term - up. Overbought - caution. - Small Ordinaries: Relatively weak compared to ASX200. Caution. - Ozzie Dollar: Multi-year highs. Stochastic and CCI dropping - caution - Gold in Oz Dollars: short-term trend - down. Indicators neutral. On the cusp
XJO currently at 4913. Major Support and Resistance for XJO: Resistance: 5000; Support 4200 . Mid-point 4600.
Copper - the short term trend is up in a medium term down trend channel.
Seasonality - last week of April in the 3rd Yr of the Presidential Cycle has been neutral.
Sentiment - generally too bullish to sustain this advance much further.
Several disturbing and variously unrelated undercurrents: Relative weakness of Australian Small Ordinaries Speculative Bubble in Silver Medium term down trend in copper Low volume on the Australian market Very low reading in implied volatility (VIX) - too much complacency Disquiet about the Australian government?s performance in areas such as resouces and carbon taxes. Rumours beginning to circulate that the government will try to make house prices more affordable by tackling pricing pressure from property investors. Such action would be have unexpected consequences for the banking sector and the stock market (see: http://www.smh.com.au/national/talks-test-the-water-on- negative-gearing-change-20110420-1doxq.html)
Such a list requires mention of: bond yields in Greece Portugal and Ireland going parabolic, Oil Price, Libya, Middle East, Japan, Nuclear fears, China?s efforts to restrain inflation, other East Asian economies? efforts to restrain inflation, Sweden raises rates, EU raises rates, Thailand raises rates, Brazil raises rates, Standard & Poors puts U.S. credit rating on ?negative? status, etc., etc., plus unknown black swans.
None of the above precludes the market going higher - but together they make for a weakening context. And that qualifies for "Understatement of the Year" :)
Short term the market looks like it is going higher but I?m expecting at least a short term top and possibly an intermediate term top in the next week or so.
For daily updates - check http://redbackmarketreport.blogspot.com/
(20min delay)