We're back in the danger zone

The XAO Indicator turned red yesterday but what really concerns me are the consecutive lows the market is making while the stochastic indicator is oversold. We often see panic collapses in these circumstances, so hold on to your hat. It also means that the ultimate low is not too many days away now. However, even though the low may only be a few days away, it could be many, many points away from here.

New chart

No real leads on All Ords

It's no secret that this market is going nowhere at the moment so there has been very little to blog about. My guess is that we are in for another couple of weeks of indecision. While the XAO Indicator remains blue, we can expect this market to edge higher, but until it breaks through 4500 convincingly we need to remain skeptical that the trend has changed. Even 4400 is proving difficult enough, the market has been knocked back from there 5 times since August - but the declines from that level are getting shorter and shorter which tells me the market is building for a strong burst.

We have reached support (of sorts)

There is support for the All Ords right here (4220) and the stochastic is back in oversold territory. So this is as good a place as any from which to mount a challenge to the significant resistance ahead (4450-4500). That is tough resistance and even if we do get through, we have the long-term downsloping trendline (drawn from Nov '07 high to Apr '11 high) starting to come into the picture at around 4700. If the support does not hold here, we could be in some trouble.