Technical Analysis - Dow Up but All Ords Crawling

There has been a lot of talk of a two speed economy in Australia but perhaps there is a bigger two speed economy when we look at the world as a whole. The developed world which has slumped during the GFC is showing signs of recovery, slowly but surely. The high-flying GFC defying developing economies led by China and dragging a resource economy like Australia (it's more relevant here to classify Australia as a resource economy than a developed economy for our current argument), are showing signs of braking due to overheating. Let's look at our usual comparison of Gann angle charts for Dow and All Ords to compare.

Looking at the Dow first, today's news announced the Dow has doubled its GFC low, meaning it's now over 12000 while the GFC low was 6000. This has much less importance though than the half way point between the Peak and Trough of the GFC. Roughly, the Peak-Trough is 14000-6600 = 7400. Half of this is 3700, but clearly, the DOW is way above 6600 + 3700 = 10,300. So the half way point is clearly broken and not relevant now.

What is interesting from the Gann angles is that the current rise in the Dow sits very nicely at the Gann +10 line and has been doing so since mid 2010. The mid 2010 point, from our previous analysis, was where it looked like it was a double top. Since then the Dow has powered ahead. There are no visible signs of breaking any angles.

Going on to the All Ords, our previous review stated that a triple top has been confirmed. This was the right call but since then it has reversed quickly. The result for the All Ords is however a bit lack lustre. Since the reversion from the triple top, the All Ords has climbed but only very slowly. At the moment it is at the level similar to the peak of the triple tops between Oct 2009 and mid 2010. In fact the current All Ords is hugging the top of the Bollinger Band and there is no evidence of violating any Gann angles soon.

So what do we make of all this? Though the All Ords is moving very slowly, both All Ords and Dow are still on a very firm positive trend. Unless there is any reason to doubt, we can play the market with the continuing trend but keep your fingers on the button since it can turn absolutely at any moment.