Weekly Report, week ended, Friday, 8 February, 2013
INDICES ONE-WEEK PERFORMANCE
INDICES ONE-WEEK PERFORMANCE
MONTHLY CHART – XJO
WEEKLY CHART – XJO
The bottom pane shows ADX and ADXR. This is a measure of the strength of a trend (it ignores direction of the trend). Above 20 is considered a strong trend. That’s where it was in December 2012. There have been stronger trends. March-October, 2009 was stronger than this before hat trend finished. Other stronger trends have been corrections – which are invariably more violent than bull rallies.
DAILY CHART – XJO
I could expand all this quite comprehensively but room in this report, unfortunately, doesn’t allow for that. I might add that ADX and its accompanying indicator, Directional Movement, are highly complex and not for the inexperienced. (The above approach doesn’t constitute a trading methodology but could provide valuable information in a top-down trading system.)
SP500 – DAILY
EUROPEAN TOP 100 – WEEKLY
CHINA88 – WEEKLY
NIKKEI 225 – WEEKLY
First of all, a run down of the major world indices that I watch. Two out of five indices were up. Last week, four out of five were up. The figures: XJO, +1.02%; SP500, +0.31%; Europe Top 100, -0.64%; China88, -0.04%; Nikkei, -0.34%. The two most important countries for Australia (China and Japan) were in pause mode, with movements to the downside. We may be getting out of sync with some important world markets.
Our market has reached trend levels rarely seen. The weekly Stochastic on the XJO is just a smidgin below 100. It can’t go any higher than 100. That’s a higher level than at any time in the past 10 years. The daily ADX is at 65.2. Above 40 is an extreme reading. Small Ordinaries continue to underperform the Fifty Leaders and the XJO. It’s a principle that in a strong bull market, the small caps lead. They’re not.
This strong trend raises the question: Are we now in a secular bull market. Plenty of commentators think so. The DMI on the Monthly XJO is indicating that we are. The poor performance of the Small Ords says: NO. I think we still have to crack XJO 500 and then test that as support before we can feel confident.
How high can our market go? Who knows. But the odds aren’t good for this to continue like this in the short term. In the longer term, if the market can crack XJO5000, then the odds of reaching XJO6900 are good.
Next week? The market is so overbought after such a strong month (months?) it’s time for a breather. I think we’ll be down by the end of the week.
A reminder – every year since 1996, the American indices have, more or less, returned to the early January level at some time during the year. But – maybe history won’t repeat this year. Maybe this market will never, ever, ever go down again. And Barron’s won’t have to eat humble pie.
Remember: do your own research. Make your own decisions. I hope that the information I show might help you just a little.
For daily updates – check http://redbackmarketreport.wordpress.com/
ETF: SLF – WEEKLY