I have been away from my charts for three weeks but not a lot has changed. The SPX is slightly higher but with growing negative divergences while some of the other important indices in the US such as Transports and the Russel 2000 are lower. Gold rallied and then came off over the period while our XJO is ten points lower.
Late last year I started mentioning that I thought we would have volatility through to January. There certainly was volatility but at that stage all to the downside. Now I have another important ten days or so coming up. I feel sure that the market is going to have some surprises/signals for us to fret over during this little window of opportunity.
Some of the patterns are really worrying me and our XJO is up there among the worst of them. Are we in the process of completing a head and shoulders top pattern on the hourly chart - nothing confirmed at this stage. Banks have still been unable to pull their weight. Interest rates in Australia have continued to ease. I mentioned previously that I could not believe that economists/politicians were not watching what rates were doing in the actual market place while they continued to believe that rates were going higher this year. This situation has certainly changed now that the figures are so glaringly obvious. I have maintained for some time that seeing the three year treasury bond rates below the 90 day bill rate was a very negative indicator for the economy.
Also concerned short term about gold. However, what we must keep in mind is that since late last year, gold has worked its way back up to the tops of the past five years - remembering that the low was in 2011. I believe this will prove to be a large base pattern. In my last notes I mentioned that it "might be asking a bit much"to expect it to break through this lien of resistance in the $1350 area. I know the word "patience"is not favoured by traders but on this occasion, I feel it is necessary. I just need to see how the short-term pattern is going to play out. Also not terribly impressed by the high volumes in a number of our gold stocks on Friday. Yes for every seller there is a buyer but I was not happy that there were so many ready sellers. Want to see how this plays out as well.
A mixed picture across other commodities as the so called "trade talks"are on/off depending on which day of the week it is. At the end of last week the grain markets were suggesting that the talks were "on"again. Monday will probably be different again.
After breaking its downtrend at the beginning of the year, Shanghai has run right up under the huge top it had formed earlier - a similar situation to a number of markets. However, Brazil has gone on to score another new high last week.
I have been very concerned about the steaming coal price chart. It has rallied slightly while I have been away but it is now right back to the crucial support line on my chart. Certainly not giving off good vibes at the end of last week.
(20min delay)
