Support not holding

The old resistance zone of 4700-4750 does not seem to have provided much support. If the All Ords closes under 4700 for more than a day or two more, it will not auger well for the near term. What's more, an intra-day low on the All Ords below 4651 (tomorrow) will turn the XAO Indicator red. As we know from experience, when the XAO Indicator turns red, we need to be cautious - to say the least. For what it's worth, I continue to believe that the 4620 level will provide good support but that will be in the face of a red XAO Indicator. Given the increasing international volatility (Korea, Ireland, China 'tightening'), you would have to say that if the XAO Indicator turns red tomorrow, you might prefer to watch from the sidelines.

All Ords testing support

The All Ords is now at the bottom of the range of the old resistance zone - 4700. Since early October the All Ords has hardly spent any time below 4700. Look at the chart below and you will see what I mean. A couple of days below 4700 could portend lower prices. And significantly, the XAO Indicator will turn red below 4640 (dotted green line).

On the chart above I have also drawn in the common retracement levels of the move down from the April high to the May low. As you will see is quite common for the price to oscillate between the common retracement levels. If this were to continue to hold true then the All Ords could bounce from here (being the 61.8% retracement level). If it does not hold here, then the next support level could be around 4620 (being the 50% retracement level). To me that looks the most likely although at that level the XAO Indicator will be red.

All Ords through resistance zone

The All Ords is well and truly through the resistance zone we have been watching for many weeks - but it has been a struggle. Theoretically we should roll on now until the next significant resistance - 5000. The 5000 level represents a 50% retracement of the move down from the all time high in November 2007 to the March 2009 low. If the market gets there, it will be the second test of that level - the first attempt was in April this year. The XAO Indicator remains blue and while it does so we should hold on to our long positions. Hopefully any pull-back will find support at the previous resistance of 4700-4750. Here are two charts. One is a daily of the All Ords and the other a weekly to give you a longer term perspective. Click charts to enlarge.

A Tale of Two Cities

These two charts could explain the indecision in the All Ords. The top chart is BHP for the past 5 months. The lower one is CBA for the same time period. They have moved in mainly the same direction during that period. But during October something odd has happened. While BHP continued onwards and upwards (essentially following the DOW), CBA abruptly turned around and headed south. Other banks have behaved in the same way as CBA, while resource companies are with BHP. What's this about?

All Ords dilly-dallies

While the Dow tests April highs, the All Ords languishes 6.5% below its April high. Is the All Ords lagging or telling us not to go there? At the moment it can't convincingly shake the resitance zone (4700-4750), although it has broken the trend-line. Interestingly, after breaking the trend-line, it pulled back, touched it and then bounced off it sharply. Also, the XAO Indicator remains blue. The next post "A Tale of Two Cities" could explain the indecision - resource stocks are powering ahead while financials charge in the opposite direction - no wonder the All Ords is standing still caught in the middle of the tug of war.

All Ords closes above resistance

After nearly a month of prevarication, the All Ords finally closed above the upper range of resistance - not to mention having clearly crossed above the down-sloping trend line. Needless to say this is a good sign for those of you holding long positons. The old resistance should now act as support and there's now not much to suggest the market won't reach 5000 or so. That should take about a month from now. If there is any change in that view I will let you know.

Resistance holding on All Ords - but will it last?

So far, the resistance level (4700-4750) is holding back the All Ords but will the 'levee' hold the 'rising waters'? Time will tell. Here's an updated chart. Keep in mind that the XAO Indicator is blue and there have been a number of changes to the indicator in recent times. That tells me that if the All Ords were to break upwards it could break hard and fast - 5000 would be the next stop.

All Ords - Will it break through or break down?

The XAO Indicator is still positive, although it has gone sideways for the past two weeks. Looks to me as though it can't make up its mind - to break through or break down. Personally I am becoming more confident that it will ultimately continue its upward move. On the other hand, that's a typical emotion to have near the top of the market. Let's review the resistance we are up against right now. First, the current resistance falls on a 61.8% retracement of the move down from the April high to the May low. Secondly, there's that long downward trendline connecting the November 2007 high and the April 2010 high that the market has to get through to move higher. Thirdly, the 4700 to 4750 resistance level I have previously mentioned is also a resistance zone highlighted by the Advanced Get software. Oh and one another thing, an astrologer wrote recently says that by mid-October the stockmarket will be back in the headlines again . . .  well, we'll see. Here's an updated chart. By the way, if the market breaks through the resistance, there's a good chance it will break hard and it is not difficult to see the market running to 5000 in quick time.

All Ords update

The XAO Indicator turned blue on Sept 7 as expected. This is now the 6th change in the indicator this year. That is a record. Old traders will tell you that a long period of indecision in the market will often be followed by a dramatic move. The question is which direction will that move take? Well, I have my suspicions but investing and trading should not be a guessing game. Personally I will be following the XAO Indicator. While it is blue, I will be long, when it turns red I will be taking precautions. Here's today's chart. The downsloping line is a trendline connecting the Nov 07 high with the April 10 high. The horizontal line (4,735) is the predicted point at which the downsloping line might intersect the All Ords.

Is XAO headed higher? For how long?

Despite the recent rally, the XAO Indicator has yet to change to blue but it is less than 5 points away. 4,619 is the level at which it will change and that could come as early as tomorrow. But if it does change, how long will it last? As you can see from the August 28 post, September is historically the worst month for the Dow and our market will follow the Dow. Today's chart shows the downsloping trend line drawn by connecting the high of Nov 1, 2007 and the high of April 15, 2010. That should create some resistance for the All Ords between 4,700 and 4,750 and that should come in the next week to ten days just in time for a September high.