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Market comment
Peter's Portfolio changes
Due to the market volatility I have decided to send out this quick email (so it may be a bit rough around the edges) as a follow up to the comments I made in the last newsletter about the market. I have been doing a newsletter once a month but I thought you might be interested in this weeks price action as it is very interesting.
Please remember if you cant read the script or charts click on "view online"
The market had a strong but volatile week, a very impressive performance to close up near the highs of last week on strong volume. The horizontal support line at 5100 was respected.
However the OBV has closed slightly below its last low 9 weeks ago, which is a little disconcerting but another good week and this could rectify itself. Stops remain tightened accordingly.
As I said last week this market could fall to the trendline support around 5000 we just have to wait and see.
Below is a chart I post often. It shows the correlation between the U.S. SP500 and the Aussie 500 (the All Ords or XAO)
A closer inspection shows that in Dec the XAO fell below its previous low in Oct, when the U.S. did not. But now our market has stayed above the last low in Dec but the U.S. has not falling below it.
Perhaps this is why...?
There has been much talk about Australia's economy and the commodity cycle, is it over or not? Is China demand slowing and how will this effect Australia and the world? As traders and investors we go to the charts to show us what is happening in the present, as opposed to what was or could be.
This 6 month chart displays the CRB which is an index representing a basket of commodities, it compares it to the SP500. The gold line is the US SP500, you can see that recently the CRB black line is clearly outperforming, the result a rise in commodity stocks. Lets look at one of our local commodity stock indexes.
Above are 2 charts of the Midcap resources index over different time frames. Both charts display a 10 EMA. (exponential moving average) The index appears to be forming a basing pattern, more confirmation is required with higher prices but the early signs are promising. If this trend continues our market will play catch up to the U.S. and may even start outperforming it, (would'nt that be nice!) because we have more resource stocks where the U.S. is tech heavy.
A really tell tale sign will be if the XAO starts to produce 52 week highs in the resources sector, so keep an eye on them as I post them in the 52 week high section of the website.
My Portfolio: I have updated my portfolio, it had a good week rising 1%. Go to the portfolio page for details because I added BSL and bought MGX, an open trade in the system. I have no stops or buys for Monday this week. The cash I have left I anticipate will be used to pyramid existing positons as they go up. Click below for details.
http://www.easysharetradingsystems.com.au/peters-portfolio.html
Have a nice weekend
Peter
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