Market Comments. 6/1/2010

(Click on the Charts above to see a bigger version.)

Well - if you look at the broad market index (XAO) nothing much happened today.

Well - it did.

It was a tale of two stock markets. Metals and Miners Sub-Sector was up +1.7% and the Financials down -0.8%.

The Advance/Decline Ratio was 1.6:1 (much higher than you would expect on a quiet day) while the UpVol/DownVol Ratio was a whopping 2.4:1.

When the market has these split days with Miners much higher than Financials, the market can appear flat - but the risk appetite is quite high. Punters get stuck into the small miners - so lots of up volume, and the advances outrank the decliners quite considerably.

The Metals and Mining has now closed outside the top Bollinger Band. The last time it did that was in mid-September. The RSI on this Index is now over 71 - higher than any time in the past six months.

This market is ripe for a pull-back. Will it? Who knows. But when it does - it will go down relatively quickly. Enough to change the long term up-trend? Who knows. We'll wait and see what happens. My betting is that the market will retreat and then continue on its merry way upwards in the uptrending channel.

But if it breaks below the support line of the uptrending channel - look out below.

(And watch out for black swans careering down the road if you are crossing at the green light on the pedestrian crossing.)

Cheers
Red