Shanghai, the Dow and the All Ords

Below are three charts: the Shanghai Composite Index, the Dow and All Ords. The vertical red line (19/4/10) shows the Shanghai index turning red 12 days before the Dow and 8 days before the All Ords. The Shanghai index turned blue yesterday but the Dow hesitated - having got within 16 points of turning blue on 27/7/10. The All Ords is still 100 points from turning blue. Is the Shanghai index leading the way again?

Shanghai- click chart to enlarge

Dow- click chart to enlarge

All Ords- click chart to enlarge

Is Giralia pointing the way?

One of my favourite stocks is Giralia (GIR). One reason for that is that its chart is highly reliable. Today the daily bar turned blue. The 'XAO Indicator' is quite reliable on the Giralia chart. When it turns blue on Giralia, it is a good reason to believe the overall market is going higher. (The writer owns shares in Giralia - This is meant as a disclosure only and not a recommendation of any kind)




Click on chart to enlarge

Is direction about to change?

Over the past week or so, the All Ords has formed a tiny 'flag' and today it broke out of that flag. Often, a flag forms at about half way of the move. The half-way point is shown by the dashed green line. This means that we can expect the All Ords to reach the upper green line - at a minimum. I expect it to find resistance at that point and 'lo and behold' that resistance coincides with the June high. If the June high is taken out, the XAO Indicator will turn blue. To me the price move from the July 6 low looks bullish. I think the odds have shifted and favour a change of direction to the up. This won't be confirmed until the June high is taken out.

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No change

The XAO Indicator is still red so the main direction remains down - but there has been a heartening little rally off the recent low (6 July). If the All Ords takes out the high of 14 July, that would be interesting for the bulls. At this stage though, we still need to see the 21 June high of 4,641 exceeded for the XAO Indicator to turn blue and there is an awful lot of resistance to get through starting at about 4,525. The market has been sitting around under that resistance for a couple of months now.

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Is this a turning point?

First it could be a double bottom. Secondly there is divergence on the price oscillator - that means the index has made a new closing low but the price oscillator did not. Thirdly, you will see from the 27 June post that the "PTI" number of 26 indicated a "failed 5th" meaning that the move down was likely to end at the May low. But before you get carried away, remember that these comments are merely cause for hope and not a pointer to a high probability move up. Also, even if the market does rise from here, the probability is that it will end at or below the high formed on June 21 (that is what happened in June when the market failed to exceed the May 13 high). The June 21 high must be execeeded before the XAO Indicator will turn blue.

Click on chart to enlarge