29 Sep 2009 – Waiting for Non-Farm Payrolls

The market was unable to hold yesterdays gains, albeit those were made on a public holiday with low volume. The first piece of economic data was released which immediately put the market on its back foot, but the big one comes Friday. Between now and then we also have end-of-quarter window dressing so its going to be a little volatile.

September 24 2009 – Caution

I am very cautious of this market at present and have increased my hedge from 20% to 40% overnight. We highlighted in last nights Dow Jones report numerous bearish technical signals that were coming together. if we see follow through it could drive the Dow down toward the 8900 – 9000 support, about 700 points from current levels. Like the ASX yesterday, the weakness over the last 2 sessions has been enough to turn Daily Momentum into the red.

September 24 2009 – Negative US lead

Quite a negative session in the US last night with a few key technical signals heeding a warning (refer tonights Dow Jones review in Global Markets). As a result I have taken a 20% hedge against my own exposure and will add to that if price weakness follows through. The ASX is looking a little tired, although on so many occasions in the past when its looked tired, it moved higher yet again. The daily and weekly trends remain firmly up but daily momentum is now DOWN. I will also say that there is Type-B Bearish Divergence in place. This is not our strongest, but coupled with the US signals plus momentum turning into the red, I am watching closely.

22 September 2009 – Momentum lost

Our Daily Momentum indicator has turned flat after several days of non-activity. It also shows bearish divergence but we don’t pay too much heed to that one preferring our standard divergence indicator as the best trigger. That one though is showing a slight degree of Type-A Bearish divergence so we’ll be watching price action closely in the coming days. Activity has been quiet so far this week with traders citing the US FOMC meeting on Wednesday and Thursday as a holding pattern. As each day goes on we are able to move stops higher to get exposure lower.

September 21 2009 – Quiet Trade

The market was again very quiet as a myriad of economic data is released this week, including the FOMC decision on interest rates. Early trade was driven by a strengthening USD – remembering a strong USD will equate to weak equity prices. Mid-session some positive economic news released that placed a bid back into the market, but even so trade was very quiet.

18 September 2009 – Re-weight complete

Today marks the end of the index re-weighting from which the ASX did slightly underperform. The market was weak early but closed well off the sessions lows and did so on very large volume. I view this as a good sign. We can’t argue with the trend so continue to go with the flow and see what next week brings. In my Portfolio Disclosure I have started plotting the weekly equity of the various portfolios I trade which over time will give a better indication of progress. This started with last weeks ending equity indexed to 1000. It does not include YTD gains. The technical term for this chart is a Value Added Monthly Index (VAMI), although I’ll update in weekly. You can Google VAMI for further detail.

September 17 2009 – Contrarian

A pause day today ahead of tomorrows equity options expiry. That event can swing price around a little. Almost every technical indicator is over extended and stretched. Everyone is saying this market needs to dip to some degree. Perhaps it will. But the fact that almost everyone is calling it suggests it probably won’t.

September 17 2009 – Complacency?

I’m getting that niggling feeling of bullish complacency. This market just keeps belting higher and its disturbing. Its not healthy. When my three accounts hit new equity highs day after day I tend to get worried.When it happens with such consistency the markets tend to reverse sharply. The last time was back in mid-June. We try not to dwell on feelings here and arguably things technically remain very strong. Our momentum filter ticked up for the first time since mid-August. As usual we can only go with the flow with knowledge that our systems will get us out if anything untoward unfolds.

September 16 2009 – Industrials playing catch-up

The concerns of a weak September based on seasonals seems to have been lost in the bull hype. Yet again we’re seeing evidence of a bad news event being shrugged off by the market, something that it has been doing for some time. The Transports had a quiet night compared to the Industrials, although we are now playing catchup. We can’t argue with the trend. We can only go with the flow and manage what ever the market throws our way down the track.

September 16 2009 – New Highs

Todays monumental strength was enough to push our momentum from Down to Flat. The daily and weekly trends remain firmly. Our bearish divergence is being spun into oblivion. Late last month we discussed in detail (refer XJO review archives) about the ascent off the 2003 bear market lows and how the market didn’t take a pause for many years. It could be argued that its happening again. Hard to believe after the end of the world last year. We’ve also been watching the Dow Jones Transports vs the Industrials noting that the Industrials were yet to breakout even though the Transports had been surging higher. The Industrials finally complied last night by making new highs. That Transports/Industrials signal has been quite amazing. Our stance for some time has been that we kind fight the trend. No reason to think otherwise now either.

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