See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
Strong price action this week on low volume. This week the top 200 performed well and the Small Ords (100-300) was flat. Also this can be seen not just by looking at the charts, but the 52 week highs confirming. Just one alert in the 300-500 but six in the ASX 300. Three of those six alerts being in the ASX 100, ALL CAR CBA.
Last night the gold price was sold off heavily, perhaps my comments on the 24/5/24 were correct - scroll down to see the chart of the GDX that I posted a few weeks ago and here is a repeat of my concerns.
"Looking at the Monthly chart of the GDX below I would like to see more volume. May is nearly over, the volume is down a lot compared to April and next week in the US is only a 4 day trading week because of Memorial day on Monday. The OBV is hitting overhead resistance and the 3 period (3 months) MFI is at the top of its range. There is no doubt price is in an uptrend, but to make the price continue its uptrend it needs more love, and the language of love in the markets is money - volume."
So people lie and we all suffer from cognitive bias, but charts do not lie - no doubt some knew about the Chinese factor.
However that comment back in late May, did not stop me getting sucked into the short term rally we had before the Chinese announcement (they bought no gold in May) as I added to some gold stocks on Thursday, but thankfully only a little. We have a holiday here on Monday for Kings Bday so who knows what the market will do when it opens on Tuesday.
Uncertainty prevails around interest rates (not helping gold and commodities) and it seems the debate will continue for the rest of 2024 - until clear data emerges its appears most central banks will play the waiting game - interesting that the ECB bit the bullet and cut last week (which made gold bounce before China stomped on it)
One more chart and a focus on divergences, something I regard as a powerful technical signal. You can see clearly the divergence between price and volume on the gold chart below. The MFI is a faster moving signal than the OBV. It's pointing down quickly and more falls would not surprise me, price could come down a lot more - even as far as major support around 2000. Never forget anything is possible in the markets.
The longer term trend line of the OBV could still hold and price fall a lot more.
I read an article yesterday claiming the first 2 weeks in July is normally the strongest fortnight in the market - data dating back to 1928. Looking at the price action last week we need one hell of a rally for that record to be maintained.
Enjoy the long weekend and that's all till next week.
Regards
Peter