I've posted my regular Weekly Report on the General Forum....

I've posted my regular Weekly Report on the General Forum.

Following is the Summary and Conclusion of that Report. If you want the supporting information, you might like to check out the full Weekly Report in the General Forum.

SUMMARY & CONCLUSION

First, a summary of major world markets: Australia down -1.77%. German DAX up +1.53%. London up +0.45% SP500 up +1.25%. Japan up +2.34%. China88 down -0.65%. Emerging Markets ETF down -0.75%%. GLD (ETF for US$ Gold) down -1.09%. Copper Futures down -0.48%.

Indices from the developed world (except for Australia) were up. Australia went down along with China, other Emerging Markets, Gold and Copper. The AUD/USD was down -1.24%. The American Dollar Index was up +0.53%. A rising American dollar has a negative effect on commodities which are priced in US$. DBC (ETF tracking the American Commodities Index, CRB) was down -0.63%. While the American Dollar keeps rising, that will have a negative effect on commodities and have flow-on effects to the Australian stock market which is skewed to the performance of commodities.

This report tends to focus on Australia (naturally) and America. What happens in America affects all other markets. It is difficult to imagine we can have a bull market without a bull market in the U.S. – and vice versa.

There will be variations in the correlation. Our market has recently disconnected from the American market – to some extent a result of a weakening Ozzie Dollar and commodity prices.

The commodity prices don’t include an Iron Ore price. Iron Ore had a big rise on Tuesday >3%, but gave most of that back later in the weak. I don’t have an up-to-date price for Spot Iron Ore, but Iron Ore in Dalian (China) on Friday was down -2.2%. That’s going to have an effect on our big Miners on Monday.

Australia technically looks ready for a bounce after a big fall (-3.43%) this month.

America looks likely to be weak from now into the end of the month. We have historical precedence – plus many Fund Managers will be selling stocks to buy bonds in order to bring their portfolios into kilter with mandated allocations.

Breadth by any measure has been weakening in America, in most cases since early July – despite the new highs recorded in major indices like the DJ30 and SP500.

It is possible, of course, for Australia to remain dislocated from America. In this case we’d need to see Australia moving to the upside while, presumably, according to my analysis, the American market moves to the downside.

It is difficult to see Australia falling further here. It is seriously oversold, and at a major support level. It bounced on Thursday and Friday. Further upside looks likely. But, if America does turn down, and the Iron Ore price continues to falter, then it is quite conceivable that Australia will simply become more and more oversold. Or, perhaps, just move sideways and work off the oversold indicator readings. Then move down.

From now to the end of the month, I think we’ll see the American market finish lower, and, probably, Australia will follow. That will print a very bearish monthly candle on the Australian XJO chart. October could get nasty.

At this stage, however, the major trends, long term, on the Australian and American markets are up.

REDBACKA