Australian Market Summary
The S&P/ASX200 index closed the week at 4852 points, slipping a further 0.66% on Friday, going down for the fourth day in a row.
Overnight action in the US and EU supports a theory that this is just a dip, with the Dow rallying almost 0.5% and the FTSE 100 up over 0.5%, both bouncing off heavy support.
Monthly Chart
The monthly chart reveals a medium term trend moving into a possible new bull market phase. But again, this is dependent on the market breaching the critical 5000 level. One of my favourite contrarian indicators, AMP’s Shane Oliver has predicted a 5500 level by the end of the year. I’m holding my breath for now.
Momentum is going slightly sideways but is still well above positive, even after the Japanese/MENA correction.
Weekly Chart
The weekly chart clearly shows a new trading range between 5000 and 4600 points (possible Iron Condor or individual spread trades?) although the weekly directional indicator is still positive, with the negative trend subsiding.
This is a strong indication of an intra-week dip only, not a continued correction.
Daily Chart
There are a couple things to note on the daily chart: first, the Friday close was below the 15 day moving average, my preferred index following indicator. Next, this was a close below the recent support level of 4900 points, indicating weak support. In isolation (i.e without checking the weekly and monthly charts) these are bearish indicators, but the most recent SPI futures (up 17 points) plus the overnight lead from the US (well, all risk assets really) also supports this as just a dip.
I have noted what appears to be a left shoulder (a dip before the Japanese earthquake) on the chart. If this current dip turns into a new rally and breaks through 5000, we have a completed reverse head and shoulder pattern – a very powerful bullish signal indeed.
This Week’s Watchlist
So what do we think of my daily roundup of moving/interesting ASX100 stocks? To get the ball rolling for this week, I’ll publish the stocks I’m watching closely below.
Remember, this and my daily “Trading Day” roundups are in the context of a medium term trader or an investor looking for suitable entry or exit points.
Disclosure: The Prince is a full time equities trader, running a personal account. I may have positions (long and short) in some or all of the securities mentioned above. This post is not advice or a recommendation to buy or sell. Do your own research and consult an adviser before allocating capital.