Far East Capital Newsletter
Charts give signals as news flow starting up again
19 Jan 2019

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Charts give signals as news flow starting up again

As if by design, the All Ords Index breached the resistance level identified a week ago. The Metals and Mining Index closed just below its resistance line and the Energy Index confirmed the breach of the downtrend. That is all positive in charting terms and it should make you feel better, but as usual, another week of holding or exceeding Friday’s closing levels would give better confirmation.

Looking at charts of individual companies, the improving sentiment is flowing through to the juniors. Many companies have thrown off the sellers and the charts are transitioning from downtrends to either move significantly higher, or into sideways patterns. In most cases these are shorter term downtrends within longer term downtrends that will come into play later, but there is often the chance of 20-50% upward movements before the longer term trends become relevant.

It is not as if there is any particularly good news that has caused the strength. Maybe the market is just shrugging off its doubts of Q4 in 2018. Maybe a week of more stable and improving US markets has brought the buyers out. Maybe it is a New Year rally. Whatever the reason, it is a welcome movement.

There has been a notable increase in company news flow in the last week as people are coming back from the festive season holidays. With sentiment also improving we can expect to see better movements in response to the news items.
The Sentiment Oscillator shows a strong move upwards within the downtrend that goes back to January 2018. Watch to see if it does more work before the breakout. Again, it is work in progress. 

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