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.

Monday, April 4, 2011

XAO Indicator on the cusp of turning blue

The XAO Indicator is still red but only 'millimetres' away from turning positive. There have already been a couple of hints that this market was heading up again. One occurred on March 30 when the market rose above the low of March 2. That reduced the probability of a move back below the low of March 17. Then last Friday, the All Ords took out the March 4 high - that put the market on an upward bias. I am now expecting the market to continue on higher either right away or in the near future. The XAO Indicator turning blue will confirm that.
On the flip side, the current rally is almost the same as the rally in May-June 2010. That tells me that it might need a rest now or soon. This is reinforced by the 12-day RSI hitting 70. That level has caused corrections (up to 250 points) or at least a pause several times in the past year. Click chart to enlarge.

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