ALSI & Market Outlook

ALSI & Market Outlook

I just finished downloading the data from Friday's stock market close. What a turn of events. It looked as if the market was going to be depressed and close down badly in the red. The along comes the gold sector and platinum sector which was having none of it.

In essence, the ALSI regained its losses for the day and eventually went right back to close the gap left when it opened in the morning. The gap down was significant. The stock market was red everywhere!

It just so happened that I got just over 100 points around mid morning which was followed by another 200 points late in the afternoon if I had been at my pc. I had a client to meet about a particular strategy he had heard about and wanted to discuss it over with me. I happened to be in Rivonia at the time the trigger happened. Such is life.

It just so happens that looking at the Resources Index, a.k.a the RESI, the market certainly looked to be heading further south. Considering however how the gold and platinum sectors closed off our resources heavy top 40 index swung in the late afternoon.

Many safe haven investors taking to the apparent refuge of gold and other precious metals like platinum with the aim of protecting their capital. Both Anglo Gold and DRD Gold have made new highs as discussed they might last week. Platinum is looking strong to test the R150 resistance if it can break above the old resistance of R145 which it closed on Friday afternoon.

Considering the ALSI end of day chart, there could well be a swing come Monday morning depending on the close of USA on the Dow and SNP. It doesn't look good right now as both of them made new lows. It would be worth a look at the FTSE. We could well look for some confirmation from the movement Monday morning when the FTSE opens.

The ALSI end of day chart does indicate very oversold position with stoch and rsi below 30 and 10 respectfully. Immediate resistance is at the close of 17681 with support at 17160. We could find ourselves challenging 18071 if the open is positive and the market swings bullish.

The low oversold levels on the indicators imply a 200-300 upside in the morning but again lends itself to the sentiment of the US close which was negative. One may like to look at the Asian open to confirm our direction until FTSE opens.

I would consider the LIVE charts as well and seeing as though we closed up on my LIVE charts I conclude that 17426 is 1st level support followed by ultimate support at 17210. 17844 seems a strong resistance level too on the upside.

It certainly warrants waiting for after the open to assess again the market sentiment. Bearing in mind that the end of day chart on the short term indicates a retracement with the medium term still implying probability of downside after a short pull back.

Keep an eye on AngloGold and DRD gold. Anglo American is heading into oversold position as well. and has broken recent support levels. But it may require another 2-3 days before it retraces briefly.

On closer look into DRDGold, the share does look overbought now. It is displaying a well known reversal pattern on a candlestick chart called a Morning Star. It closed on Friday with an upside hammer. There certainlys seems to be strong support at just below 900c.

DRD's old high of around 971c to 989c is set to be the strong resistance. The share's momentum may well fall off here and we may find it having a small retracement back to 692c and find support there again. It is vital to trace the movement in GOLD using the NewGold ETF as a precursor to how DRDgold and other gold derivative shares will perform.

We may only see a slight retracement of 23% to 789c before the momentum in the gold price forces the share onwards and upwards. Likewise with AngloGold. on DRD gold 875c is quite an important support level and would signal that the retracement is in play with potential to move to 789c.

It certainly pays to get access to good training regarding your trading.

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