* 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 * Ozzie Dollars - Daily Chart * Dow Industrials - Daily Chart * VIX * Ratio Chart - American Commodities:Bonds * Weekly Copper Chart * Seasonality - March * Summary and Conclusion
INDICES ONE-WEEK PERFORMANCE
XAO: +0.73% Nine of ten S&P Sectors were up. Best: Materials +2.08%; Info.Tech. +1.49% Worst: Financials -0.46%; Energy +0.12% Risk: 50-Leaders +0.67%, Small Ords +1.07%. Risk Taking dominates. Gold Miners: +3.85% Property Trusts: +0.69% Friday (XAO +1.1%) put the week in the black.
MONTHLY CHART - XJO
XJO: above the 10-Month Moving Average. Positive MACD: above its signal line. Positive MACD: Above Zero Line. Positive RSI: above 50. Positive Williams%R: Above the Overbought level. Caution DMI (Directional Index): Crossed above zero - Positive. In the very Long term the outlook remains bullish. N.B. Market has been in a sideways consolidation since July 2009. Major Resistance: 5000; currently - 4864
WEEKLY CHART - XJO
XJO: Above its a long-term up-trend line. RSI.14: Above mid-line. Positive MACD Histogram: Negative Divergence. Caution MACD: Above Zero and above signal line. Positive Weekly Williams%R: Weakened below the Overbought level. Caution. Chart is above 13-Week Moving Average: Positive Directional Movement: Positive. Chart is in a bearish wedge. A break above that wedge would be very bullish. Break below that wedge would be bearish. In the medium term, this chart remains positive.
DAILY CHART - XJO
RSI.14: Above mid-line. Positive. MACD Histogram: Below Zero. Negative. MACD: Above Zero. Positive. Williams%R: Above mid-line and a double bottom. Positive 13-Day MA: Above. Positive. Directional Movement: Negative. The Short-Term Trend reverted to the upside on Friday. This chart looks bullish in the short term. Reaction to American moves on Friday night might temper that assessment.
DAILY CHART - SMALL ORDINARIES
Above 13-Day and 65-Day SMAs. MACD below Zero line. Negative. Directional Index - Negative. RSI at its mid-line. Neutral In a sideways consolidation since December, 2010. Lowest pane is a ratio chart XSO:XJO - negative Williams %R above mid-line. Positive. The Small Ordinaries Index represents breadth in the market. Positive breadth is necessary for the market to continue upwards. This chart has improved since last week, but on balance is still negative.
GOLD IN OZ DOLLARS
Gold in Oz Dollars (tradable through the Gold ETF) tends to trend inversely to the general market. MACD Histogram and Directional Index both above Zero. Positive RSI: Above mid-line. Positive. Above Super Trend Line: Positive. Below trend line from early February 2011. Above 13-Day and 65-Day MA. Positive Relative Strength: Gold:XJO still favours Oz Gold. Medium Term Trend is still up.
OZZIE DOLLAR
Oz Dollar remains within a sideways consolidation since beginning of February 2011 13-Day Moving Average: Above. Positive MACD: Above signal line. Positive. RSI: Above mid-line. Positive. Williams %R: Overbought. Positive. Resistance: 1.026 Support: 0.99 Plenty of support provided by congestion area (circled). A strong Ozzie Dollar is needed to support further rises in the Australian Stock Market. This chart remains positive (just).
DOW INDUSTRIALS
Long Term Trend is UP RSI.14: Above 50. Positive. MACD: Below signal line. Negative. Above Zero. Positive Williams %R below mid-line. Negative. Directional Index. Positive. In sideways consolidation for past eight days. Narrow 200 point range Break from consolidation should determine direction.
VIX
This chart shows an ETF that tracks the Vix Index (the Fear Index). The Vix is an index based on traders? expectations of volatility in the next 30days. High volatility equates to fear and a falling general market. The chart and its indicators are generally bullish - negative for the general market Current chart pattern is a symmetrical triangle. A break either way should determine medium term direction. UP - negative for the general market. DOWN - positive for the general market.
WEEKLY RATIO CHART U.S. COMMODITIES:BONDS
While Commodities outpace 30Yr Bonds, the American market should continue to be bullish. Negative divergences on MACD Histogram and CCI are flashing warning signs. Relative Strength is at a dangerously high level. New high this week suggests Dow Jones Industrial will continue higher. Caution
While Commodities outpace 30Yr Bonds, the American market should continue to be bullish. Negative divergences on MACD Histogram and CCI are flashing warning signs. Relative Strength is at a dangerously high level. New high this week suggests Dow Jones Industrial will continue higher. Caution
Weekly COPPER CHART
Copper this week was in a narrow range consolidation above the 13-Week MA. Positive MACD Histogram. Negative divergence from price. Caution. RSI negative divergence from price. Caution Copper/Gold Ratio (like the CRB/Bonds Ratio) has a high correlation to the SP500 Index. But often is a leading indicator. Bottom pane shows the Copper/Gold Ratio; I.e., copper price in Gold (U.S. Dollars). A break below the uptrend line would be bearish. This chart remains positive but warning signs are flashing.
SEASONALITY - MARCH
Usually, the market reaches a peak in late March or early April. (Related to the 15 April tax deadline in America.) Since 1963, general market has been up 63% of the time with a gain of 0.6%. We?re in the Third Year of the Presidential Cycle. In the Third Year since 1963, the general market has been up in March 100% of the time with a gain of 4%. Since 1959, the SPX has been up 100% of the time in March. Since 1979, the Russell 2000 has been up 100% of the time in March. The American Federal Reserve will be active in the market for Treasuries on 7/8/9 March with a total expected purchase of US$22billion. This will maintain liquidity in the American monetary system and provide support to the stock market.
SUMMARY & CONCLUSION
TRENDS: - XJO: long term (monthly chart) - up - XJO: medium-term (weekly chart) - up. - XJO: short-term (daily chart) - up - Dow Industrials: medium-term - up - Dow Industrials: short-term - sideways. - Ozzie Dollar: Medium term. Sideways consolidation. No significant reaction to Middle East instability. - Gold in Oz Dollars: Medium-term trend - up.
XJO currently at 4837. Major Support and Resistance for XJO: Resistance: 5000; Support 4200 .
Copper and Commodities in general remain strongly positive - positive for world markets.
XJO Long-term Chart Pattern: Rising bearish wedge. Break upwards - very bullish; break downwards - very bearish. Wait and see. Probabilities for this chart pattern favour a downside break.
Any correction is likely to be muted because of Bernanke?s money supply (QE2) and the strength of the Presidential Cycle in the 3rd Year.
Next Week: Geo-political events (oil price) will determine direction.
Reading Al Jazeera shows the Libyan civil war continues. Turmoil, protests and crackdowns continue in many Middle Eastern countries These events can move rapidly and move the markets with just as much rapidity.
The Game Plan: - Seasonality favours further upside in March. - The ?overbought? conditions which prevailed in February have been eased. - Short-term down trend seems to have finished. - The longer term trend is up - follow the trend. - If escalation of Middle East turmoil occurs, it will raise the oil price and scuttle the longer term trend. -Plenty of caution signs are flashing. Be flexible.
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