Comment: A narrow range, inside day on low Relative Volume (volume compared to the 20-Day Average). RV today was about 89%. The day’s action was choppy from the open till about 1.00 p.m., then it dropped. The last hour was more or else flat. Really a nothing day on low volume. But – it failed at resistance.
The market was hit today particularly by negative sentiment in the Consumer Discretionaries. The market reacted poorly to David Jones reporting, down over -6%. Myer went down in sympathy -3.2%. Health, the best performer this year, carked it with CSl down -2.5%. Sonic Healtcare went along for the ride, -2.5%. It seems that they were down simply because they’ve been too high. I reckon that’s a good enough reason. Now – where’s all that money going to go? Into a Westpac Bank Account? I doubt it.
Other than that, some of the really big movers on Monday like Lynas and Paladin saw some big down moves – but nothing like the up moves they saw on Monday. So, on balance, that doesn’t look too bad – unless you bought at the high of the market on Monday.
Technical Comment on the ASX200: The XJO finished at 4369.5. Support: 4337. Resistance: 4448. Indicators: Stochastic: 20.3. Positive (barely). RSI: 37.3. Dropping back below 40. (40-60 is the “normal” range.) MACD Histogram. Above zero. Positive. MACD: Below zero. Negative. CCI: -61.2. Rising above -100.
The medium term trend is down. The short term trend is up.
The past six days have formed a nice symmetry. Doesn’t mean much. If it carries through – then the next day will be a big up day. Don’t bet on it. I think we’ll have more consolidation, probably a bit to the downside.
I mentioned yesterday that it was a bit odd that we hadn’t seen a short covering rally. The past three days is now looking more like a bear flag. Let’s hope I’m wrong.
Let’s face it – this is a bear market. 13-D TMA is heading down. 40-D TMA is heading down. It’s more likely to go down than up.
On the other hand, the indicators are still on the up side.
The following chart for the Financials doesn’t inspire confidence:
The past three days look like a bear flag. Traditionally three big banks (WBC, NAB, ANZ) go ex-dividend in November and the share price settles back after that event, at least, in the short term. It seems to be following the seasonal pattern. It’s hard to imagine a really strong market without participation from the Financials Sector. It is, after all, the biggest sector in the market. It will pick up, but maybe not just yet.
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