Market Comments 30/6/2010

I looked at all this above - and said to myself, How easy does it get. Like taking lollies off babies. Go long today - and hold - this is a tradable rally coming up - money in the bank.

hmmmm. Well I've been around long enough now to worry whenever I feel like that. Those babies with their pink little fingers barely holding on to those lollies, suddenly turn into 500KG Purple Gorillas. :) (They also go by the names of Hedge Funds and Goldman Sachs.)

Anyway - enough romancing, let's have a look at today in the context of the recent past.

Last night, in America, the S&P500 was down over 3% after Shanghai the previous day was down 4%. Predictably the Australian market showed a bit of panic selling as the nervous nellies shouted, Get me out. After the initial sell-off, our market was under accumulation for most of the day.

The candle on the day is a "hangman" - often seen at the end of a trend and finished at a 20-Day Low - often a reversal point. The XAO finished in the 4300 area - an area of solid support.

Looking at the Indicators, the daily Slow Stochastic actually closed above its signal line but below the 20 line - both need to be crossed to give a short term buy signal.

The 50-Leaders are showing extreme levels of "over-sold" on all measures.

So - all that suggests a bounce. A tradable bounce? Maybe not. We could go into a sideways consolidation before more downside.

The A/D Line is of particular concern. It broke the solid horizontal support which has been in place since lateOct/earlyNov 2009. That is now a distant eight months ago. It was resisted in both February 2010 and May 2010. That's powerful stuff - now broken. Expect more down side in the near future. (But not tomorrow.)

The RSI has taken on a bear market profile. Oscillating between 20-60. In bull markets it tends to oscillate on the XAO between 35-75.

We're a long way from hitting 20. I expect the XAO RSI to get down near there before we see a meaningful, tradable rise.

So - is it just like taking lollies of the baby? Maybe - perhaps I should check that I took my pink pills this morning. You know, the uppers. :)

Cheers

Red