See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
Comments from last week: Trading is based around probability IMO. I think it's probable the XAO will consolidate here for a while, do some "backing and filling" as many readjust their portfolios for the rotational change that has just occurred. That change being a rotation from some bigger overbought stocks into the smaller and midcap stocks that have not been a part of this rally - yet.
The market rallied up fast but then fell to exactly where it opened as consolidation and readjusting of portfolios and the new paradigm took hold. What new paradigm? Probably mostly Trumpanomics, as traders and investors moved money to stocks and sectors that may benefit from a Trump win.
However, looking at the chart it now looks even more bullish than last week. Volumes have increased and the OBV has made an all time new high suggesting price will catch up to volume - that means higher prices.
Back on the 14th June I talked about the correlation between the Russell 2000 in the US and the XAO in Australia. You can scroll down on this page to see the chart and my comments on that date.
Looking at the present price action you can see the XAO is correlating nicely to the Russell as it has often done - except for the extreme times during Covid, but the XAO still went up, just not as much. I know there is a lot of fear and uncertainty at the moment, the main fear being that this bull market can't last much longer and the sell off (reallocation of funds) from the Nasdaq will create a bear market. Well, that's not what I think when I look at longer term price and volume charts of the Russell, but that's another discussion and perhaps next week I will post some charts showing what I mean.
Have a great week
Peter