Market focus, April 26

The week in retrospect – Return of the Bulls

The week opened with the XJO at 4932, near the lower end of a trading range. After a tentative start on Monday, bulls took control, not only clearing the 5000 barrier at the upper end of the range but continued to push higher above 5100, to 5135, just 30 points below the last peak at 5165. Being closed, the Australian market was unaffected by the transient US$356 billion decline in US markets on April 23, as a result of  hoax tweet alleging that the White House and President Obama were under attack.

A turn in direction of the market came on Friday afternoon as traders locked in profits, and closed positions before the weekend. As a result the market closed just 5 points lower for the day at 5097.5. As a result the candlestick appearance for Friday was a “gravestone Doji” with a small “real body”, and a long shadow upwards. This implies that buyers were unwilling to bid the share-prices higher for the present. This late sell-off might be a signal for others to take profit after the stellar gain for the week; this could then result in a lower high, and herald further decline in prices.

The strength of the gains for the week suggests that any pull-back next week would find support at around 5000 before again rallying.

165.6 point bullish surge in the XJO for the week

165.6 point bullish surge in the XJO for the week

What is happening to the price of gold?

A cautious rally in the price of gold.

A cautious rally in the price of gold.

Traders saw gold as being over-sold at the beginning of the week at US$1340, leading to a rally through the week which carried the price back up to US$1460. Some investors favoured buying the physical stock. The big risk of buying now is a further fall, creating a lower high, and risking further falls. Such a scenario might however be bullish for many Australian stocks.

Resource stocks stage something of an overdue rally.

RIO in a downtrend  despite a late week rally.

RIO in a downtrend despite a late week rally.

After initially shaking off market concerns over losses and asset write-downs, the market eventually responded with a 3 month sell-off of shares from early February, which has carried the share-price from a high of $72.30 to a low of $52 – a $2o decline.

Technically the share-price is still in a down-trend, but this week’s rally has extended to the mining stocks with RIO lifting to a high on Friday of $56.75, before easing off to $55.80 at the close.


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Categories: Chart Analyses, Technical Analysis, Trading opinion, Uncategorized

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