Corrective rally! Will clear 3740?

All Ordinaries Index(3728) Near Term Trend: Positive > 3.6k I said "I will go with sideways option for the near term trading (within the overall bear market) till the things improves a lot (first break from recent channel on the daily charts and then possibly close above 3740)".

See the inlaid chart(daily), after initial hesitation, the index broke the falling parallel channel on 29th Dec 08(3554) showing first sign of strength. Today the index kissed 3740(second stage confirmation), our long standing key reversal level, but closed below it. Expect continuation of this corrective rally, provided it successfully trades/closes above 3740. In such eventuality the revised target for the bulls is placed near about 4k. On the weekly chart, the Index had given upward break from the falling parallel channel (blue) & now trading well above the same, confirming our short to medium term corrective bullish view. As anticipated, the index had taken good support in the previous consolidation area(3400) on the Monthly chart. As long as it holds, the bulls will get an opportunity to muster the strength; however anything below it will be disastrous.

Further on the quarterly chart the index has taken good support on the trendline drawn since Mar 91. Now this trendline will act as a guiding force for the bulls in the next few quarters. Value for the current quarter(Mar09) is around 3.4k, a meaningful stop for the trend following investors. In short, the bulls are in comeback mode, but the rally is corrective in nature rather than fresh bull market. Observe stop of 3.4k (for investors) & 3.6k (for traders). If able to close above 3740 then we could see 4k within next few weeks. As far as long term structural bear market is concerned, there is no confirmation (lac of consolidation pattern/faster retracement of last leg etc) to conclude the worst is over; & as such possibility of retesting the recent low is open, but may not immediately.

3740 remain untouched...! Weakness persist!

All Ordinaries Index(3499) Near Term Trend: Sideways

I said "The daily/monthly & quarterly charts indicating towards possible "shift" in the control, provided 3400 is defended by the bulls; & on the upside a close above 3740 will be the first sign of the strength". Last week, the index failed to achieve anything, i.e. neither a close above 3740 nor a break below 3400.On the daily charts, I was expecting bullish reversal if the index breaks (upward) the falling parallel channel (blue) and post a close above 3672(on a safer side preferably 3740). Interestingly, the index is indeed trading above the upper end of the parallel channel in the initial part of this week, however will it be able to sustain & close above the channel? It seems doubtful, for the two reasons, first, the break from the important price zones/clusters normally associated with flurry of hectic activities with increase in trading interest (read volume), which is lacking as of now. Second see the following daily chart, the price movements are with the range (of falling channel) & as long as it remains intact, one higher degree (read from weekly parallel channel) break out is always questionable. In short, I will go with sideways option for the near term trading (within the overall bear market) till the things improves a lot (first break from recent channel on the daily charts and then possibly close above 3740).

Final combat...(3400-3740)..?

All Ordinaries Index(3533) Near Term Trend: Turning Positive

I said "the activity now shifted to new falling parallel channel (blue), unless seen the close above this channel (last weeks value 3740) the downtrend will remain intact; on the quarterly charts 3400 is crucial, holding close above this in the current quarter (Dec 08) will be a positive development".

Last week the index failed to archive the feet, now once again making attempt to break the upper end of the channel (blue-3672) in the current week. Once seen close above 3672, on the safer side I will go far value of 3740, the reversal will be in sight. However on the downside, the strong support is emerging near 3400 mark, the key reversal point observed on monthly/quarterly chart. As long bulls defends this area, the possibility of reversal, at least short to medium term, will remain alive. See the inlaid monthly chart. Despite of the last months dip slightly below 3.4k, we have a sharp rebound in the fag end of the month, thereby restricting the months close well above the threshold. The strength, seen here in the bulls camp, is likely to be put for the severe test in the next few trading sessions before making a final attempt to surpass 3740. In short, I am expecting a fierce battle in the ranges (3400-3740) and break out thereafter, mostly upward.

On the quarterly chart the index is showing repetitive rebounds near the very curial trendline support of 3400. The end of this months trading will clear the 'fog' i.e. whether it holds the key level of 3400. Overall, the daily/monthly & quarterly charts indicating towards possible "shift" in the control, provided 3400 is defended by the bulls; on the upside a close above 3740 will be the first sign of the strength.

Required close above 3740; else...

All Ordinaries Index(3484) Near Term Trend: Negative

In the last review(3483) I had stated "the trend is down; expect short term respite if able to hold 3400(then value of the lower end of the parallel channel); on the monthly charts, again, 3400 is a critical long term support; however if failed to hold & recover we may test 3000". Since then it broke the lower end of the channel (dotted) & went below 3.4k, only to recover and zigzagged between 3.2k-3.6k. In the process the dotted channel has lost its importance and now the focus is shifted to the "blue channel". Last week & the beginning of the current week we saw a hectic activity near the upper end (3740 value for this week) of this new blue channel. Unless seen a break & "close" above 3740 the downtrend will continue, unabated. The value of the lower end of the parallel channel is between 3k to 2.8k for the next 1-2 weeks.

On the long term charts (Quarterly), the Index is retesting the trendline drawn from low of Mar 1991. The value of the trendline, for the current quarter, is 3360, say 3.4k.Will it able to hold it? Lets wait and watch, rather than pre-empt.

AORD broken stop..watch 3400! Else..

All Ordinaries Index(3483) Near term trend:Negative

In the last review I had argued in favor of corrective rally by year end; also mentioned 3.9k as near term stop for the bulls. The index failed to move upward as anticipated & also broken the stop in quick time. In fact AORD was the only major index to break below the recent October low, indicating continuations of the downtrend contrary to our views.

Observe the inlaid weekly chart. The prices are near to its lower end(3400) of the parallel channel (dotted), suggesting possible respite in the extremely near future. However if broken downward then the index is likely to fall into steeper falling parallel channel (marked in blue) where the lowest value of the lower end trend line is near 3k.

On the monthly chart, the index is near to its critical long term support line, the value is also near 3400; below that 3k.

AORD at long term support....!

All Ordinaries Index (4006) Near term trend: Positive (stop 3.9k)

AORD lost 46% since its all time high(6873 Nov 07) i.e. worst than 1987 fall. However, along with anticipated global stock market recovery (see world index analysis), we are heading for a corrective rally based on following "Technical" observations. See the inlaid "Quarterly" chart. The index has been supported "exactly" on the trendline drawn from 1991 low of 1275.

Considering the magnitude of the fall (46% in just 12 months), & the earlier excellent supports (Dec92, Mar03) provided by this long standing trendline of 17 years, expectations of the "rally" are justified. But is it complete "reversal" of the trend? Lets see how the trend evolves in the next few weeks/months.

On the extreme near term (daily) charts, the recent fall (from 4291) has given fib 0.618% retracement of the entire rally (3693-4291), now expect 3921 as a good support for the bulls in the near term (near Stop). On the upside, once taken 4.3k expect a steady build up towards 4.4-4.5k in the next few weeks, or by the year end.