Sunday, 13 November 2011

ASX 200 set to open higher

The ASX 200 finished last week's after hours trading at 4336, up from Friday's ASX close of 4297.

There was a lot of sound and fury surrounding the markets last week, lots of volatility, but the S&P 500 and EUR/USD finished the week barely changed from where they opened. The S&P 500 in particular is at a critical juncture.

The daily chart of the ASX 200 suggests that until we see an upwards break from the sideways channel, the bulls are getting ahead of themselves and ahead of the market. Which is not to say they won't eventually be proven correct, just that we have to wait and see.

S&P 500 trending down

I think of all the markets, the S&P 500 is showing us the clearest measure of whether or not the markets are going to rally in coming months.

The weekly chart long term view shows the S&P 500 to be trending down, wrestling with a trend line drawn parallel to the channel that contained the bear market from late 2007 to early 2009. 

The next few days or weeks are crucial.

The daily chart shows that the market has tested the Head and Shoulders neckline.

EUR/USD weekly and daily charts

The EUR/USD "kissed goodbye" the weekly chart trend line a couple of weeks ago, a bearish edge. The past week saw lots of news related volatility, but the market closed the week not far from where it opened.

The daily chart suggests that the market needs to soon fall back below the 40 day moving average to support the bigger picture bearish edge. Failure to do so would likely lead to a period of broadly sideways choppy trade.

AUD/USD weekly chart

The market's position below the 40 week moving average is bearish. Compression of the 40, 18, and 4 period moving averages on any market and any time frame often precedes development of a new trend.

Gold daily chart

The throw over / false break illustrated on hourly chart posts earlier in week has not yet followed through to the downside... perhaps it won't. Wait and see. It was a low risk edge, but not especially high confidence.

Silver daily chart

Canberra and Queanbeyan housing stock on market

The following chart shows the number of properties listed as For Sale and For Rent in Canberra and Queanbeyan for the period since September 2010. The extraordinary explosion in the number of properties listed For Sale since early August 2011 will exert downwards pressure on prices.

The data source is, a local Canberra website.