Sunday, 11 March 2012

ASX 200 is trending down

The trend line break and the configuration of the moving averages both indicate a down trend for the ASX 200, albeit a down trend that is in its infancy, not yet strong. A rally over 4250 would muddle the picture and indicate that further sideways chopiness lies ahead. After hours trading last week closed at 4216.

S&P 500 and NASDAQ 100 rally in to week's end

These two US indexes plunged early in the week only to rally in to week's end. There is a big divergence between these two US stock indexes (also the Dow) and other stock indexes around the world, with a similar divergence present between the headline US stock indexes and other Undollar risk assets. Will these strong divergences last? My expectation is that they won't. That said, I don't know which way the divergences will resolve. Also, I find trading based on expected or imagined market correlations is less fruitful than trading individual markets on their own terms, taking each individual market at face value. Perhaps the value of the Undollar concept is a thing of the past.

S&P 500. There is still a potential double top being formed between the 2011 high and the recent high. I would not be long this market until it breaks upwards through those levels.

NASDAQ 100. Is it kissing goodbye to the trend line? Anything is possible. There can't be many other stock indexes or Undollar markets hitting 11 year highs. I don't know of any.

EUR/USD closes the week below trend line

The weak weekly close below the trend line is a bearish indication. That said, a move below the weekly low is required to be confident of a continued bearish stance, as otherwise there is potential for a short term double bottom to be forming.

AUD/USD daily chart

A move through last week's low, if (IF) it happens would likely lead to further weakness.

Gold daily chart

Silver daily chart