I am not a financial adviser so you should not take any part of this blog as being financial advice. Observing and interpreting charts is a hobby and so is this blog. The information in this blog is just my opinion, it may not reflect reality. Stock market investing is risky - you can lose all, or potentially more than all of your money given certain market conditions. Not only can you lose a lot of money buying shares, you can also lose a lot of potential profits by selling shares at the wrong time. So please do not buy or sell shares because of information in this blog. Whether you buy or sell shares is your decision as is the decision when to buy and sell. Do not risk any money you cannot afford to lose. Do not risk any money if you do not fully know and understand what you are doing.

Thursday, January 20, 2011

XAO Indicator still blue, but . . .

The XAO Indicator turned blue in early September and remains so. Its my experience that the best gains in individual stocks occur when the XAO Indicator is blue. It is also my experience that the penny stocks don't really take off until after the broader market has been rising for a while i.e until the XAO Indicator has been blue for a month or two. The past month or so has seen dramatic rises in the penny stocks. Could we be heading for a blow-off top? Below are three charts. One is the All Ords showing the XAO Indicator, the second is BHP daily and the third is BHP weekly. The BHP weekly is showing divergence on the RSI Indicator. This warning sign rarely fails. If it is correct, BHP is headed for a correction. If BHP falls so will the rest of the market including - eventually - the penny stocks.




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