Ok - we've had a couple of down days. The earth hasn't stopped spinning and the XAO is still above the high set back in mid-October. So - there's the first line of support and the market today dipped below that level and then bounced above it.

The high in mid-October was 4897 and today we finished at 4900.1. Close enough to a round hundred number. So we can expect a bounce tomorrow. After that? If we drop below 4900, we're looking at the next support level, in round numbers, of 4800. And plenty of support below that.

I've noted in internet chatter a lot of speculation that this is could be the start of a major down trend. Well, I think it is much to early to speculate on such a matter.

The 13-Day Simple Moving Average still hasn't turned down yet.

The RSI on the Advance/Decline Line has crossed below its 5-Day MA - so there is likely more downside. How much is still a matter to be seen.

Later tonight I'll publish figures on the 50-Leaders and I suspect we'll see the first 20-Day New Lows since before Xmas. If we find that occurring - that will also be a sign that further moves down are coming. But - I'd better wait till I do the calculations before getting too carried away.

The market was very overbought - so a retracement was a high probability. Whether it is any more than the market blowing off a bit of steam is still to be determine. A lot has to happen before we can say this bull rally is dead.

In the meantime - the long term trend is up. And this may just be another buying opportunity in the near future.

Cheers

Red