Monday, July 5, 2010

Top40 update

Last week was one to forget – in case you are holding Top40/Satrix 40. All in all, over last 9 days Top40 closed only on two occasions higher than previous day and both of those bars were not convincing at all. Market is still holding long term support around 22900, but will see what happens during new week.

Oscillators dropped last week and now they are in oversold position: Stochastic is around 10, while Relative Strength Index is around 40. At the same time, MACD is struggling to break 0 and good thing about MACD is triple positive divergence, which is quite visible now. Positive divergences can be spotted on RSI as well.

Coming week can bring us, as always, two scenarios: First one is bounce from support at 22900 and test of upper trend line and 200 simple moving average which is around 24500. On the bearish side, break of 22900 could take us quickly to 21700 support from August and September 2009.

Moving averages, which help us to determine long, medium and short-term trends: 
  • long-term (200sma) - DOWN
  • intermediate (89sma) - DOWN
  • short-term (10ema) - DOWN
Trade with trend!