See charts below with an On Balance Volume indicator and the Money Flow indicator
Well, I like to say "keep a mind of interest" not judgement. It certainly was an interesting week. The XAO above looks strong and it appears that the bull market is becoming more broad based. I say that because below you can see fourteen, yes 14, new 52 week closing highs. Last week I mentioned gold and so let's look at the Aussie gold index the XGD.
The reason I use the money flow index is that it is a more dynamic (faster) indicator than the slow old OBV. You could see a break up about 6 weeks ago signalling perhaps (no indicator is completely right or wrong) something was afoot. What I see now is a lack of follow through comparing the MFI to the price. Also a bearish divergence on the OBV when comparing that indicator with the price. You can see I have drawn those lines on the chart. Therefore some consolidation or even a pullback in the XGD would not surprise me.
One more opinion this week and its about the Russel 2000 in the US compared to the Aus Small Ords (XSO).
There has been much gnashing of teeth as to why the mid caps and small end of the Aussie market have not responded to the recent rally, so here is my reasoning. The Russell in the US has not joined in the rally and its been lagging the SPX, Nasdaq and the DOW. But! the correlation between the Russell and the XSO is obvious. Below is the chart of the Russell and the XSO
With the recent rally in the Russell the XSO is playing follow its leader. I suggest you keep a close eye on the Russell for it may well tell us if the spec end of the Aus market will finally rally. Or has it started with the 14 buy signals?
Until next week, Peter
PS: the Russel versus the XSO chart
