July 14

Market Update for Tue 15 July 2014

Chart-of-the-DayThe first session in the new week started positive. XJO rallied from the open and experienced supply only below 5520, the lower level of a resistance area. Prices could hold for a strong close near the highs of the day. XJO is now entering a resistance area where prices failed last week and four times before that. Volume remains low with only 2/3 of the average volume traded. Support is at 5470/80 and resistance at 5535. Market Condition is in Stage 1 with Daily and Weekly trend up.

The NH-NL Index is in bullish territory in all time frames. New Lows remain at low levels and New Highs keep expanding. This is healthy and underpins the up moves in the price index.

ASX NH-NL Index

The Secondary Market Internals are in agreement with the NH-NL Ratio in bullish territory and its moving average rising. The Volatility Index remains at very low levels indicating stability in the market.

ASX Secondary NH-NL Index

Breadth Indicators keep going up as well. The McClellan Oscillator remains put and did not improve greatly in the last two to three sessions. A higher high in the price index with a lower high in the oscillator could potentially form a negative divergence and give a bearish signal. There are no divergences right now and we will take care of that when it is going to happen. For now the McClellan Oscillator respects its uptrend line and keeps pushing up the Summation Index up. We discussed the importance of the Summation Index crossing above the +1000 reading in the weekend post. We might see such a breakout this week.

Breadth Indicator

The Bottom Line. The price index is in an upmove which is supported by bullish market internals. Support at 5440 and then 5470/80 is holding while resistance at 5470/80 and then 5500 is breaking. Resistance at 5535 need to break but other than that there are no negative signs or bearish signals to speak off. It’s business as usual with Trading Mode Aggressive.