Today's interesting charts
Comment of the Day

February 28 2013

Commentary by David Fuller

Today's interesting charts

David Fuller's view Price charts signal changes in investor perceptions which alter money flows.

Ireland's ISEQ Index (weekly & daily) remains a star performer within the European Union. The 10-year weekly chart shows a V-bottom with lengthy right-hand extension base formation, as taught at The Chart Seminar (TCS). This formation was completed in January. The daily chart best reveals the current staircase step sequence uptrend. I would continue to give this medium-term uptrend the benefit of the doubt, while these steps remain approximately equal-sized in terms of width and depth since January, and also one above the other. When this changes, as it inevitably will, a more significant reaction and lengthier consolidation will be imminent. Upward acceleration would excite participants even more, but more importantly, warn of an approaching peak. Over the longer term, Ireland's stock market recovery is likely to be significant, given the prior bear market and size of the base formation.

New Zealand's 50-Index (weekly & daily) registered a short-term downside failure on 22nd February and broke upwards once again yesterday, followed by additional gains today. Therefore it remains in form, albeit increasingly overextended relative to its rising 200-day moving average. Moreover, a test of psychological resistance from its 2009 peak is imminent. Consequently, risks are rising but I would still give this Index the benefit of the doubt, until it loses recent uptrend consistency revealed by the three equal-sized reactions since early November. Moves of similar consistency and even greater magnitude for New Zealand are not unprecedented, as you can see from the 2003 to 2011 advance. Here also upward acceleration would excite participants even more, but more importantly, warn of an approaching peak.

Following yesterday's chart review and discussion, China's A-Share Index has produced a clear upward dynamic of probable significance today. This is the first sign of strength since the market reopened following its week long Chinese New Year break. Further gains through tomorrow's close would confirm 2400 as a floor of at least near-term significance. Provided this level continues to hold, my expectation would be for a shorter consolidation of not more than several weeks before this year's highs to date are decisively cleared. When China regains its relative strength seen during December and January, it will reaffirm Fullermoney's bullish medium-term outlook for this market.

Hong Kong's HSI (weekly & daily) gapped upwards today to check its reaction. A decline beneath 22,440 would now be required to delay further a test of overhead resistance, which will be signalled by a sustained push above 24,000.

India's Sensex Index (weekly & daily) has lost its medium-term uptrend consistency with this pullback over the last five weeks. It is oversold in the short term and approaching its rising MA. However, the government's economic revival policies also appear to have lost momentum, and both the financial and particularly social news has been appalling in recent weeks. A clear upward dynamic is required to check this slide prior to a retest of former highs. Since India's governance and stock market is falling behind in the global beauty contest, an improved performance will most likely require a positive news development.

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