XJO Weekend Charting and Chat - 11th May 2018, page-3

In Australia yesterday:



Australia flat -0.04% yesterday.

XJO may be setting up for a pull-back:

• two shooting star candles at major resistance,
• last two candles may show a “tweezer” top.
• indicators show negative resistance.

This has been a great rally for the Australian market. Entering new longs now could be hazardous. Prepare to take defensive action.

Overnight:


Dow Jones +0.37%, SP500 +0.17%, Nasdaq -0.03%, R2K +0.19%.

Major indices were negative going into the afternoon session (NY time), but they then rallied for most to end up in positive territory. Nasdaq remained in negative territory.

It was a narrow range day – with not a lot of conviction one way or the other.

SP500:



SP500 is in a broad medium term trading range2581-2787. It’s about 60 points below the top of that range.

Indicators are all pointing up, but RSI5 is close to overbought. We could see a pause in the next couple of days. Any drop is likely to be bought.

MACD has not given a convincing “Sell-in-May” signal. We’re about half-way through the month – plenty of time yet. Watch the MACD.

VIX:



VIX is well below the danger line of 15 and the descending triangle is playing out as expected. (VIX trades inversely to stocks).

VIX is now oversold with and RSI14 at 33.97. We might now see some upside movement as VIX tends to be a mean-reverting index. Caution is needed in the short-term.

Commodities:

Industrial Metals -0.32%. Energy -0.18%.

Much of the strength in the broad U.S. market (and, to a lesser extent, in the Oz Market) has been due to strength in the Energy market. DBE is now overbought and looking for a rest time:



There could be a bit more in this – but not a lot before we see some sort of pull-back.

RB