I'm a bit late reporting on Wednesday's action. I've had some personal commitments to attend to. But - here's my two bobs worth:
Yesterday was weird. Today everybody was singing Pippa’s Song: “All’s right with the world”, unless you were a Newcrest or CSL investor. XJO up +1.1%.
This has been a strong five-day advance, up over +5% in five days. It's looking similar to the last two strong advances which soon after morphed in strong declines. At this stage the market is not overbought on the RSI so we can probably expect a bit more in this. Although, after five straight days up, we can expect a consolidation.
This looks likely to test the Santa Rally highs. In which case, the down trend channel will have morphed into a sideways channel. If that's the case, we can then expect a down move.
Volume today was high - about 114% of the 20-day average. That's high - but not enough to think that this is a buying climax. So - probably more up. But there would have been plenty of people beginning to sell into this rally today. And - if you look at Newcrest, CSL and Commonwealth Bank it is obvious.
I mentioned yesterday that Newcrest was at a logical place for a pull-back. After seeing the US% Gold figure this morning +1.17%, I didn't expect a sell off today. But - we got one. Newcrest down -4.45%.
That's a bearish engulfing candle. And they're fairly reliable at the top of a trend. The RSI was extremely overbought with reading of 88.8. Rarely do we see readings above 80 on a major index or big stock without seeing a break to the downside. As well, the Money Flow Index suggested that this was not being supported by strong money inflows. So - down it went.
CSL reported today. It disappointed on expectations. The stock was down -3.02%, but experienced some strong intra-day buying. The stock is at the long term oblique support line. I wouldn't give up on CSL just yet - but the big down move today wasn't encouraging. We need to see a clear break of support to think the bears have the upper hand.
Commonwealth Bank:
Commonwealth Bank reported solid results before the market opened - and ahead of most analysts' predictions. The stock on open was up about +1.3%, but then underwent some solid selling. At the end of the day it was up +0.37% after being down over -0.6%. A very volatile session. I don't think we can read a lot into today's action. There was clearly a lot of selling, although volume was not particularly extreme. It looks to me that the good result was well anticipated by the market - the stock was up over +5% in recent days. So there was a lot of profit taking. We need to see how this reacts long term - whether or not it remains in it medium term down trend channel.
At this stage, three of the market leaders (CBA, CSL and Newcrest) had shaky returns today. But they weren't enough to turn the market down. Data out of China was very good today, and that set most of the Miners heading strongly up. The Metals and Mining Index up +1.6%. Despite the relatively poor showing by CBA, the Financials were up +1.1%. Other strong performances today were seen in the Property Sector +2.2% and Utilities +1.9%. The Property Sector has been weak since May, 2013. It could be making a comeback. Still too early to tell - but keep an eye on it.
(20min delay)