See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
Last week I said this
"However the Russell 2000 still drags the chain making me wonder what will it take for that index to come to life? Definite, not just rumoured rate cuts perhaps......... the chart above does seem to be improving - and perhaps building for another leg up"
Well what a week! The Russell surged around 6%, the continual expectations of rate cuts in the US encouraged traders and investors to buy the index. I have spoken many times of the correlation between the Russell and the XAO, and this time the correlation again proved itself.
Looking at the chart above you can see clearly the 13 period money flow Index has broken its down trend line, however the less dynamic OBV has some work to do. 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.
Gold exploded again, however some of the gold stocks look a little overbought, but I wouldn't be shorting them. I did lighten up a little on gold stocks this week taking some money off the table - I may have that wrong and they could keep surging but I still hold core positions.
Alerts below and have a good week.
Regards,
Peter