| Weekly Trend: | Up | |
| Daily Trend: | Up | |
| Daily Momentum: | ___ | Flat |
The raising of Chinese interest rates has placed some fundamental heaviness on the markets for the moment. Technically there are two concerns; firstly is the state of play in the Volatility Index (VIX) which was discussed last night in our Global Chart Research. The VIX measures trader expectations and at certain technical points can suggest a selloff in broader stock indices. It’s at one of those points. Secondly, and along a similar vein, is our Red Alert bars that we’ve mentioned in the recent past. When we get 5 of these in succession we know the market is over extended and more often than not a decline of some degree follows. The fact that both the VIX and our Red Alert bars are at critical levels means we should be cautious in the coming weeks. Perhaps the dip has already started? In last Wednesday’s ASX-200 (XJO) review we suggested a dip into a wave-iv could be just around the corner. We’ll take a closer look at the XJO again tonight and assess the current patterns therein. Whilst two down days does not make a new trend, we do have some other data suggesting weakness could prevail in the near term.
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