Australia’s ASX 200 index rallied strongly Thursday and is headed for a test of the upper trend channel. 63-day Momentum declining below zero reminds that we are in a strong primary down-trend. Respect of the upper channel would warn of another decline — to test the lower channel border.
* Target calculation: 4000 – ( 4500 – 4000 ) = 3500
We are experiencing exceptional volatility at present and risk of false signals is high. It is important in such situations to look for strong confirmation. One step is to wait for signals on the weekly chart to confirm those on the daily chart. As you can see, this bear market is a long way from over.
Hi Colin,
Love your work. Just one question:
– On Twiggs money flow weekly 13 chart, it is showing positive. Isn’t this bullish? I am confused over your last sentence “…this bear market is a long way from over” vs the positive reading on the weekly chart. I am no clue of course and just asking for clarification.
Thanks,
Jason
Enjoyed your comment on the ASX 200.
regrettably until the people of the USA and Europe all make a realistic tax contribution I cannot see them making any advancement on their country’s debt situation.
maybe for greece etc a GST would be the way to start plus raise the retirement age to 65 as we have here in Australia.
No pain = no gain.
Cheers Rob
Hi Colin,
Thoroughly respect and highly regard your technical analysis. It keeps me on the right side of the market when taking a trade. Keep up the great work and thank you for providing a fantastic freely available charting package – Incredible Charts. A most invaluable tool for anyone starting out in trading the markets.
Thanks,
Tom
Hi Colin
Fantastic stuff. Just one thing how do you work out your target. if I remember I have seen your segment somewhere on the website
Cheers
Peter F
Simple arithmetic most of the time. Simply take the magnitude of the last trough and extend it above the latest peak. That will give you the target in a normal up-trend. In a strong trend, substitute the preceding peak for the low of the last trough (corrections tend to be short and advances strong). In a weak trend you get the opposite (short advances, strong corrections) and it is best to use a trend channel to calculate targets.
Thanks Colin. Indeed, the ASX is now firmly established in a downtrend. Stong reversal signal reuired to indicate reversal. I suspect this slow decline could go on for a month or so – if not more. Comparison with 0987 – 1991 are uncanny, though it is muych slower now.
Hi Colin
I am the person who came second in the Australian Share trading championship using exclusively, your charts.
How about a lovely double bottom on the ASX200.
Regards
Barrie Turner
Hi Barrie, A double-bottom on the ASX 200 with a break above 4350 would be very nice thank you if you could arrange one. Got any mates at the RBA?
Hi Colin,
I am inclined to agree with your comments … (unfortunately).
Your daily chart suggests breech of the momentum down trend with perhaps a short term rally to 4150 … supported with divergence on the same indicator.
Similarly the weekly chart shows down trend breech with divergence on the Twiggs Money Flow indicator suggesting a potential near term (4-8 weeks) rally to 4200+ … maybe 4450.
Early next week will probably witness some sort of correction with the follow through thereafter on good news (interest rate cut, better European news, US political solidarity, $AU weakness or similar) … add to long positions. Weakness should continue on commodity prices … I do not believe the lows are in on crude or metals … as we have commented on previously.
The above targets could offer exit points for poorer performing stocks, while any hint of bad news and lower lows and all bets are off.
Just an opinion …
Regards
G’day Colin,
I was going to say exactly the same as Jason above.
Still seeing the ASX in a firm downward trend but some signs of life, via imporving Twiggs MF 21 & 63 (daily)
Just this week I have seen what I believe is a MF downward trend (started Apr 2011) breakout (ASX 200) for the 21 and on Friday the 63 also stuck it’s head out the top, although only just.
All Ord even earlier, this week. Also for the ASX 200 the volumne seems to have picked up, all Ords not so.
What 1st alerted me to what I think I am seeing is a couple of oversold stock doing the same within the ASX. They have all 3 MF I track, 7/21/63, breaking out of a confirmed downward trend.
Finally fridays jump has the All Ord also just pocking it’s head out of the downward trend on my chart. Not saying anying like the bears over but my feeling is that the market is ready to hear better news. Maybe all the bad stuff has been absorbed and is no longer the shock it was…
But Eurpoe still hold the key to the short term voliatatity, then we have the US election lead-up… Jess, its not going to be easy going forward!
All the Best and thanks for your valuable input.
Flint