Alsi & Market update

After a fun-filled afternoon on Friday with our market rallying after the US unemployment figures came out, it was a great way to end the week!

The SNP 500 closed down below the critical 700 level as I discussed it could last week. This bodes well if you can short the local stock market. It doesn't give me a warm fuzzy feeling about our local rally or bounce right now except for one thing: Resources.

The ALSI created a bullish engulfing candle formation at the close on Friday. This gives some impetus to the weak going forward being bullish. There is also positive divergence on the stochastic.

The trouble is that the ALSI is made up of the financials and resources. The financials are being hit pretty hard and so if the resources don't rally hard the ALSI could take a tumble.

The Resources opened fairly negative this morning with DRD gold being a star performer again last week seconded by Anglo Gold and Anglo American. Silver has the potential to trigger a falling wedge formation and therefore suggests further upside in gold this week.

After the gap in DRD however I suspect it may be exhausted. We may see a retest to the old high of 950c before it goes to close the gap at 887c. Be aware that the candle chart is showing a potential double top formation on DRD.

Grindrod, is certainly making a go of it. As we discussed late last week, the chart was looking very oversold. The assessment was to look to buy it at 1126c with a stop loss at 1100c and at worst case 1080c. This is with a view to take a short term trading profit of around 106c and a swing trade profit in equities at say 1303c. Note that this trade is against the overall trend as Grindrod is below its 89 moving average.

Yes and so it happened. The market fell out of bed from 9h45 with a great 200 point drop on the ALSI. I grabbed 160 of them and that's why the delay in this post this morning... I went short at 9h45 and was out at 10h10.

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Our Financials & Industrials index is falling like a hard rock in a big pond. This combined with the fallign resources will cause havoc on our local stock market - at least for the Monday morning session.

Resources seem to be following suit after the Financials heading south. Anglo Gold and DRD seem to be holding out as well as Grindrod. Watch these shares this week. Kumba opened way down today and is probably following a drop in copper prices. This will have an effect on Billiton, Anglo American, Metorex and other copper miners.

Trade well, not often.

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