XJO - Bear Posts only (Factors which might cause the markets to fall), page-16263

New records for major U.S. indices, then a retreat.
Dow Jones +0.62%. SP500 +0.55%. Nasdaq +0.63%. Small Caps +0.9%. Banks -0.25%. Long upper wicks on Dow, SPX, Naz and Small caps give some idea of the size of the retreats - which occurred mainly in the last hour of trading. That implies that this rally could be over. Monday will be the test day.

Dow Jones.

Dow Jones set a new intra-day high, which occurred around noon (NY time) but did not set a new closing high. DJ lost about 256 points after its high and finished up about 247 points. So the daily candle finished below the mid-point of the day. That's usually taken as a reversion candle and potentially bearish.

RSI is overbought at 71.07 and Chaikin Money is showing a negative divergence from price. I'd expect the SP500 to pull back to test the top of the Value Zone (big grey rectangle) as support. Caution.

Commodities.

Results for commodities were underwhelming: Commodities -0.38%. Energy -0.43%. Base Metals +0.17%. Agriculture -0.49%. Gold -0.06%.

Yesterday in Australia.

ASX was swept up in the euphoria caused by a better than expected inflation report in America on Thursday night. XJO up +0.88% on Friday and that was a new all time closing high.

Below is a chart for STW, a big ETF tracking the XJO:

The above chart is a "candle volume" chart. The width of the candle is an indication of the volume flowing into or out of the market.

STW, like XJO, set a new all time high on Friday. The candle is wider than we've seen for many weeks - an indication that volume was very high. That high volume is indicative of a lot of buying and selling. Who was buying? and who was selling? Usually at the top of a trend, it's the so called "dumb" money buying, and the so called "smart" money doing the selling. Draw your own conclusions.

ASX200 Futures were up +0.64% overnight which suggests a positive start for the day on Monday.

Above is an intra-day chart for ASX200 Futures. In the afternoon, it formed an Adam and Eve double top, but the sell-off in the Futures was not as marked as that in the big U.S. indices, but the chart formation is, however, bearish.

Take care.