CHRISTMAS CHEER ONLY HOPE FOR SOME FLEETING UPSIDE
AS I explained last week the direction of the market should have been known by the end of trading last Friday and after the indecision on Wednesday last week, that indecision was resolved when the market dived last Friday.
There was a big move to the upside on Monday this week, but it was short lived as the market took back much of those gains on Tuesday.
The only chance I see now for a reversal to the upside is when the market moves below the spike low formed on November 11 it will be a third lower spike low at close to the same level around 5,700.
These three successive lower spike lows can be seen in many instances to be the end of a sustained move down as we have seen recently.
My main concern is, there is no discernible strength anywhere in the market.
The big four banks for instance failed to show the strength that the index did and they are a large percentage of the index.
Much of the gain on Monday could be attributed to BHP, RIO, and Telstra (TLS), stocks which also form a significant percentage of the index. Both BHP and RIO reversed to the downside on Tuesday and on Wednesday they moved back up, but did not exceed their respective highs formed on Tuesday.
If TLS can hold in there and close above $2.98 today it will have formed a weekly pivot point to the upside.
The problem though, is for it to move higher it has to break through a long term downtrend which should prove to be strong resistance.
Although some stocks have formed weekly pivot points to the upside, then reversed to the downside again, the Index has continued to fall since early September without once forming a weekly pivot point to the upside.
I mentioned last week that as of Wednesday it was entirely possible we would have seen a weekly pivot point on the index, but last Fridays move down put paid to that.
All the strength at present is to the downside still and I am not very hopeful we will see the market return to an uptrend soon.
I think the best we can hope for is a short term rebound before the downtrend resumes, and we do often see some optimism in the market around Christmas.
Late Wednesday this week saw the index put on a spurt to the upside after falling one hundred points soon after the open and pretty much traded sideways until lunchtime then slowly regained about half the initial loss by the close.
All very indecisive and it will be interesting to see if Wednesdays closing move is the start of the Christmas rush.
For me trading the market over the holiday period has been a bit of a trial as low volumes usually mean big spreads.
That means there is a larger than usual difference between the bid and offer prices making it difficult to get a reasonable price when either buying or selling.
That prompts me to mention market volumes in recent times. Although daily dollar volumes are reasonably constant the number of actual trades is kept artificially high by the very small trades and I mean trades as low as one share and lots of them.
This to me indicates some sort of computer generated trades being made to manipulate the market.