30 October 2009 – Bounce…but,

On the face of it a good recovery by the US overnight and some decent follow through here. However, there are 3 points of contention. The daily trend is still down regardless of todays strength. It may flick higher should price follow through to the upside on Monday and we can start looking at long trades again. Yes, this dip maybe a buying opportunity, but our rules are there for a reason so we’ll stay with them. Secondly, yesterdays fall left a gap and the market, especially the indices, don’t like gaps. They act as a magnet and once filled the trend resumes. That gap was almost filled today, but not quite. Lastly, the Dow Jones Industrials rallied +2.05% but the transports lagged a little.

29 October – Plunge Protection Team

A big up session after GDP showed that the US economy grew for the first time in 7-months. This seemed to be the antidote for the recent pessimism. The market rallied from the get go and never paused till the close. The strength is certainly welcome, but it does not yet signal a new trend higher as yet. We need to keep advancing and we need to see it occur on high volume. A low volume advance here is not positive as it would point to lack of buyer demand. We’ll also keep a watch on the Dow Jones Transports and Industrials. That divergence has confirmed a bearish stance and will take some time to unwind. As such we’ll be standing on the sidelines for a week or so until we gain some semblance of what the next trend will offer.

28 October 2009 – Ouch!

The market was flogged convincingly today. It failed to show any attempt at a bounce, even a minor one. It was one way traffic. Even the Share Price Index futures failed to show its normal intra day volatility and failed to bounce in any form. A quick look through the second tier stocks does show closes well off the sessions lows but the same can’t be said for the majors. Another negative session will turn the weekly trend DOWN. With the daily trend DOWN we stand aside from any long trades and the Systematic portfolio automatically turns itself off. We’ll be looking for shorting opportunities in the coming week but specifically setups from low volume rallies.

28 October 2009 – Short trades now

The market has now changed trend and as such we can only resort to short trades. I will await a reaction rally on low volume then look at swing trades to the downside. This may take a week to get going but there should be some good opportunities for quick swing trades.

28 October 2009 – Trend is DOWN

The All Ordinaries daily trend is now DOWN. Today was a sharp down session on high volume, reinforcing our fears of the last week. What this means is that long trades should be avoided, existing stops on long positions should be tightened (which has been done tonight) and short positions sought. I will be rummaging through the charts in the coming days looking for opportunities. Trend changes are always uncomfortable affairs, especially if the new trend get off to a weak start. Chop and change tend to be the order of the day. The last few days have seen numerous positions closed. I think personally I am now down to a handful of open trades in the short term portfolio and the way its going I’ll be 100% cash sooner rather than later.

27 October 2009 – Weakness developing

The warning signs have been showing for the last week and it now appears that the market is perhaps intent on taking a deeper breather. Our expectations of this has been discussed in depth in the recent ASX-200 (XJO) review as well as the US Index reviews, namely the Dow Jones. Other markets are also showing themselves to follow the same patterns, i.e. Gold weakening and on the verge of invalidating its ongoing bull move. The US Dollar and VIX index trying to push higher. Be prepared for more equity market weakness.

26 October 2009 – Soggy

The market remains a little soggy today, although it did manage to close well up off its lows. Weight on the market is the possibility that the RBA will raise rates by 0.50% next week. Most pundits think 0.25% but there is some speculation that more could be in store. Also, a very large section of the S&P 500 report earnings this week. The Dow Jones Transports is looking very weak after its failure to break into new high ground. We’ll be watching this with interest because it may suggest a deeper correction is nearby.

October 23 – Divergence widening

The divergence between the Dow Industrials and Transports remains in place, in fact took on a more dire look about it after last nights action. Recent price action has also stalled the Daily Trend which has now turned FLAT and daily momentum has now turned DOWN. We’ll see what unfolds in the coming week as earnings wraps up but I am very cautious still.

22 October 2009 – AMZN hits home run

We had concerns last night about the non-confirmation by the Dow Jones Transports (refer Global Chart research) but the market shook that off for the session. It remains in place. The US market shrugged off some early bad news on the housing front and focused on the better than expected earnings by a wide diversity of firms. This seemed to underpin the theory that the recovery is broad based. In after market trade Amazon reported better than expected results and its shares have rallied 13.5% which will underpin trading into the end of the week.

22 October 2009 – China data

The weak closes over the last week have had enough strength to flip our momentum indicator all the way to the DOWN position. We’re still seeing that small coiling pattern we discussed last night but there are a few negative signs coming from the US charts that have been discussed in a little more depth. You can view those in the Global Chart Research area. Todays weakness was more or less due to the Chinese numbers that were very good, but just not quite up to expectations.

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