Market Comments 25/10/2010

Basically another flat day today with the XAO up just +0.22%. Despite a solid night up on the New York Stoch Exchange and the Nasdaq - we had a low volatility day. That often happens when the American markets are going into holiday mode. Our market doesn't seem to want to take any dramatic moves while a hiatus exists in America. Expect some definitive move in Australia next Monday.

Despite the low volatility, the volume today was well above average. That's unusual. It looks like some people were buying up - but the risk averse were selling into any moves higher.

Some bottom feeding was evident today with beaten down stocks like AGK, CFX, GPT and Tabcorp having reasonable rises. FMG (Fortescue) also had a good rise - but I wouldn't describe it as a beaten down stock.

The banking sector attracted a bit of early interest but couldn't go on with it. The RSIs for the four big banks are:

• ANZ - 33.7
• NAB - 25.3
• CBA- 36.7
• Westpac - 31.7

The stocks with the strongest RSI's are:

• AXA (a take-over target)
• ITO (a take-over target)
• Sonic Health - 69.6
• Telstra - 74.5

I've just developed a new ratings system for Sectors within the market. Interestingly, the two strongest sectors and the only ones registering positive are Telecommunications and Health.

Telstra had another stellar day - but I would think it's time for a breather. Probably "buy the dips" time.

On the weekly chart, the Slow Stochastic still shows no sign of turning around. The MACD and RSI are in danger of falling into the bearish category. Much further down in the market and I'll have to say that the intermediate trend is down. But - it hasn't happened yet. And I'm still optimistic that we may have seen the low.

Interestingly, the RSI on the daily chart is within a whisker of breaking above its down trend line. The RSI is often a leading indicator for the market and a break above its down trend line would suggest that the market has turned around. But ... it hasn't happened yet.

Cheers

Red