Feb 25 2010

Weekly Trend:		Flat
Daily Trend:		Down
Daily Momentum:	___	Up

Big reversal day for the ASX today and continues to hint at our thinking that a near term high has been put into place. Over the course of the day the market reversed its early gains and dropped 2.1% on high volume. One of the markets favoured stocks, TOL, usually associated as a safe haven investment, was slammed almost 18% after missing guidance. Indeed it ranks as the largest single day fall since it was listed in 1993 – a lot of damage here. The markets around Asia also dived as political and social unrest erupted in Greece. As mentioned in the last few evenings, Greece is possibly a trigger for Euro-contagion concerns and may be the central reason a major selloff is not far off. We’re sticking with short side plays on the ASX even though momentum has picked up in the US.

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Feb 24 2010

Weekly Trend:		Flat
Daily Trend:		Flat
Daily Momentum:	___	Up

We mentioned last night that the technical picture suggested a near term was imminent and it seems we may have found it. Today saw decent weakness on back of numerous factors, including a weak lead from US equities and base metals, as well as strong selling in Japan that weighed on Asia. In an ideal situation we’d like to see the local market rotate in a sideways band for another week or two before dropping lower, but of momentum picks up right now we could be on our way toward that larger target area that has been discussed in the nightly reviews. Trends remain flat, both weekly and daily, and the broader range is also well intact. I have no immediate directional bias but do favour downside over the coming months.

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Feb 23 2010

Weekly Trend:		Flat
Daily Trend:		Flat
Daily Momentum:	___	Up

All in all a quiet days trading with most emphasis on eanings releases. The market was soft through most of the day yet rallied back to close on its highs after Hong Kong rallied hard in late trade. We continued to be held by the braod range that’s been in place since September. That said the technical picture is suggesting a near term high right about here to be followed by some decent weakness, but what will trigger this is uncertain. It appears the only current macro issue on the agenda is the ongoing deficit crisis in Greece and whether or not that will spread through the Eurozone. Range bound markets make for frustrating trading. It may pay to be quick on the exits rather that await full completion of swings.

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Weekly Trend:		Flat
Daily Trend:		Flat
Daily Momentum:	___	Up

Big strong day in the local market which has now retraced 50.0% of the Jan 11 – Feb 9 decline. As is always the case. we expect these retracements to travel back to the 50.0% to 61.8% level before reversing again. That said we need evidence that weakness is entering and as yet we’re not seeing it. Todays strength was enough to tilt the daily and weekly trends back to flat. Another two days of this will see them revert back to bullish and our systems will kick in again with new buy signals. A close look at the S&P 500 chart shows a 3-wave decline into the early Feb lows which is now reversing sharply. I just wonder if yet again we’ve got a false downside pattern and that the market will kick back up in that grinding fashion that we’ve seen since September? Difficult trading conditions without doubt.

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Feb 19 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Up

The trend remains down. The bounce we’ve been discussing over the last few weeks has slowly taken shape, although with the US raising interest rates over night there is now scope that we’ll start heading lower for a week or so before completing that bounce. Our bullish divergence, the cornerstone for the bounce, has now fully unwound. In an ideal situation we should weaken for a brief period, bounce again through this weeks highs and then start the major leg lower to the mid-year target levels. The raising of interest rates is of concern. Stopping inflation is one thing, but undermining delicate confidence is something  different altogether and I would assume that now is not the time to be taking that route. We’ll certainly see how the US takes it tonight, but as at writing the night trading shows the Dow Jones futures -100pts.

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Feb 17 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Up

Finally some strong upside movement that is directly related to the Type-A Bullish divergence. We’ve been on about this for a week now so its good that its offering up the strength. The larger question is whether or not we’re going to skip to new highs again and look back at this weakness as just a correction, or whether or not we’re having a brief bounce before heading lower again. I favour the latter scenario but will be willing to go with the bullish flow if proven incorrect. There have not been that many bullish divergence setups with individual stocks (unlike the US) but should the trend change to up again we’ll be seeking out breakout trades.

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Feb 16 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Flat

Some would say the market did well today, but taking a closer look it was a poor performance. Firstly early trade saw the index +52pts before closing at +22, so well off the intra day highs. This weakness was due to comments surrounding the Greece deficit issues and more Eurozone concerns. We’ll see how they play out in the coming days but that concern is still playing with traders nerves. Secondly, and perhaps more importantly, Westpac results were well received driving it up +6% as well as dragging up NAB and ANZ. These three combined accounted for a rise of +31 index points, so remove them and we actually would have had a negative day. All in all we’re looking for the market to offer up a little more bounce over the coming week, but its struggling. Larger picture we retain the view that weakness will prevail into mid-year and expect the index to drop toward 4000.

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Feb 15 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Flat

The market was heavy today after China announced late on Friday that again it was curtailing commercial bank lending again in an attempt to slow the economy. That said activity was very quiet for a number of reasons; Chinese New Year and many Asian markets closed, a US holiday tonight and a plethora of ASX earnings due in the coming week. It seems most are willing to sit in their hands and take direction once all the news is digested. The market still has a heaviness to it yet we’re inclined to stay with the ’sell the bounce’ theory at this stage. Bigger picture we remain in the broader range that has been in place since last September.

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12 Feb 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Flat

Another weak effort by the ASX. Gains are not being held and volumes are low. We expected weak volumes on this bounce as a signal of waning buyer demand, but to date we haven’t got much bounce. Early next week will remain quiet as well for a number of reasons. Several Asian markets are close, the US market is closed Monday and we also have much of the ASX earnings coming through in the coming fortnight. Everyone will probably sit on their hands until this has all passed and then decide on some direction. A good reference for ASX earnings can be found HERE. The bullish divergence is having the desired effect in the US but as yet its not gained the traction here.

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Feb 11 2010

Weekly Trend:		Down
Daily Trend:		Down
Daily Momentum:	___	Flat

Momentum has today turned flat. The Type-A Bullish divergence is starting to do its job. I expect we’re 2-days into a bounce that will see the market head back toward 4730 to 4790 in the coming week or two. In an ideal situation this bounce will be a selling opportunity but we must ensure volume dries up on the strength. It may also be enough to flick the daily and weekly trends back to UP but we’ll take it one day at a time. Our immediate goal is to defend open short positions and for more aggressive traders perhaps looking at a few ‘hit and run’ long trades.

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