Follow us on our Journey

As mentioned in last week’s blog, the US market’s fall at the end of that prior week suggested our market would follow come Monday, despite some bullish signals in the charts. As we know it did fall, but on Thursday it rallied strongly and I was hopeful if it continued into Friday most of the losses of the early part of the week would be recovered. Alas, investors, like a herd of spooked rabbits, ran for the doors and prices tanked across the board, both here and internationally - due to central banks warning of potentially greater rate hikes than the market had factored in.

I said a close below 7,500 for the XAO would signal lower prices to come – perhaps 7,300. The XAO finished at 7,468 but as resistance and support levels tend to be bands rather than a precise line in the sand, I’m saying that is close enough to 7,500 and while we are teetering on the edge of the abyss, we’re not quite treading air yet.

Price fell exactly to a long-term line of support the blue dashed line being the lower boundary of the shaded price channel. The close wasn’t at the day’s low so there is hope the market will be seen as oversold and the dip buyers will push the market up Monday.

XAO 6May22

Observant readers will probably see I have slightly adjusted the blue line and the channel and while that could be seen as making the story fit the facts retrospectively, it is just a case of incorporating new data. Charting is dynamic and as the ebb and flow of prices change, chart patterns change as well, and the chartists job is to continually update their analysis.

I’ve left my Stocks to Watch unchanged. While this week has damaged the potential many of the listed stocks possessed, all still have positive aspects that could change their fortunes. And, those that have fallen heavily have a greater likelihood of recovering strongly (that of course assumes they do recover!). I’ll review the damage next week.

PS: I do quite like CGF and it was one of the few shares to rise last week.

Contact

Robert Norman

Phone: 0428 346 951
Email: robert@sharecharting.com.au

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