An up day to be sure, but an overly convincing one, although we did most of our upside yesterday. Many stocks gapped open on the US lead but dropped back intra day, which is quite usual. The bulls are chomping at the bit. Those stocks that did close weak were mainly on low volume and low volume strength is not something to be overly joyed about. That said today strength enables us to get our stops to breakeven on current long positions.  The broader market remains in its holding pattern below 4600. We’ll be looking closer at that and the major sectors in tonights chart reviews, but until 4600 breaks we need to be vigilante of a bull trap. Interestingly enough the Growth Portfolio is starting to offer up buy signals on some of the large cap leaders which is something a little more broad based than many of the lower cap. energy and miners.

Note: We’re about to start adding in futures and FX setups within the Global Power Setups area (formally US Power Setups).

80 days. That’s how long this market has been stuck in a 300-point range, about 6.75% maximum rotation from top to bottom and back again. We need to go back to mid 2006 to get a comparative example and prior to that late 2002. We can therefore assume that, albeit rare, we’ve traveled this route before and will no doubt travel it again. For trend following, and even swing trading, it can make life very frustrating and difficult. However, on the basis that it has happened before we need to be able to push through and get to the better trends on the other side. Tomorrows direction is anyone’s guess.

Note: We’re about to start adding in futures and FX setups within the Global Power Setups area (formally US Power Setups).

One day doesn’t make a new trend but we suspected that some bullish follow through was going to be seen after Fridays activity. We posted several new long trades for aggressive traders late yesterday and all of these were filled. AAX and KZL were the standout movers, but we need to see follow through. If upside momentum continues we’ll be moving from a bearish stance to neutral at around the 4523 level basis the XAO. We’ll do a full update on the broader market indices in the coming days:

Note: We’re about to start adding in futures and FX setups within the Global Power Setups area (formally US Power Setups).

I eyeballed some 500 charts this evening and one stand out pattern is bullish A-B-C’s. The daily and weekly trend is down so these don’t fit our criteria, however if the US markets have a significant bullish night I will post some setups over the weekend for Monday. As usual, going against the broader market trend is considered an aggressive stance and is not suitable for everyone. Stock of interest are: ABY, AGY, AGO, AAX, BOW, KZL, LNC, PDN and WHC. Check back on Sunday night if the US takes off. Otherwise we’re really in no-mans land. The trends are down but not convincingly so. Some of our short trades have tagged their respective breakeven stops and whilst this may seem frustrating it is good trade management.

4494 is an important level in the ASX-200. Below that we technically retain our bearish view, but any move above takes us back to a neutral stance. If we probe a little higher after todays move, yet fail to move above 4494 the bearish pattern becomes slightly more aggressive, that is we start seeing a ‘nesting impulse’ or a 5-wave pattern sitting within another 5-wave. If we are in a wave-3 lower, then one needs to think that it will extend and contain a smaller degree pattern as well. Back above 4494 really starts to confirm that all weakness to date 2010 is certainly corrective and not the end of the world as so many are currently calling. Even our expected move down to the 3800 – 4000 is a healthy decline within the realms of strength off the March 2009 lows.

We’ve been flirting with the index trend being up or down over the past week. Todays very small down day was just enough to tip the scales from Fridays neutral to bearish. From a discretionary perspective the trend is neither here nor there, and by the way the election outcome had transpired it may well be that we stay in limbo without a significant lead from the US. As the trend has turned down the Systematic PowerSetups have taken defensive action on all positions and will not signal any new buys until we get some strength back.

Another stiff down day for the broader market but much of the mid-cap resource and energy sector held up reasonably okay. Technically though we retain a view that ongoing weakness is unfolding and will continue to do so until late October. Daily and weekly trends are both in a neutral state right here, but will turn down with another negative session. Momentum remains firmly down. Positions in the Discretionary setups are difficult to decipher right here without any substantial direction, although my bias is to the downside.

The US markets struggled to hold gains into the close and because they are retesting recent highs I retain a very cautious outlook for the coming months. Our advanced technical view remains, that is we anticipate weakness through to end of October before a late rally into Christmas and through 2011. However, if strength over the last week persists and recent highs at 4600 basis the ASX are penetrated, it could be that our wanted correction will again be delayed. I feel the coming sessions will not offer a great deal with US options expiry this Friday, but then again the market always surprise.

Interesting times indeed. The market seems intent on retesting the August 9th and June 21st highs circa 4600. A break up and through, especially one that doesn’t meander between here and there, would be quite a significant bullish signal with a possibility that a drive back toward 5000 could be unfolding. That’s not our highest probable expectation but it’s something that needs to be sitting in the back of our minds. The Small Ordinaries, specifically the Resource and Energy sectors, is very strong across the board with some nice trends starting to develop. This Friday is options expiry in the US and all evidence points to quiet trade between now and then. If so, we may keep seeing the local market bid up.

A mixed for sure at present. The market made a very convincing recovery today – basically a strong trend day where is opens on its lows then rallies all day. It rallied hard enough to reverse much of yesterdays damage. Indeed many of the small cap. resource stocks remain very strong with some even threatening to breakout through recent highs. That said, the market was at an oversold position and there were a few gaps that needed to be filled. Our risk here is a low volume bounce last 2 – 3 days followed by another leg lower. A break up and through last weeks highs would be a very bullish signal and invalid our expected decline.