Market Summary, week ended 19/11/2010

WEEKLY MARKET SUMMARY

We’ve now had two weeks of retracement. Enough? Maybe.

XAO was down this week, -1.28%. On a 20-Day (Monthly) basis, the XAO is flat, -0.04%. The volume was below average on Monday and Friday, that’s common. Volume was above average on Thursday and that corresponded with the biggest down day.

Two out of ten S&P Industry Sectors were up. Health, once again was up, +0.78%. A lot of that rise was due to a positive reaction to the annual report of Sonic Health Care. Telecommunications was up marginally, +0.03%, after Telstra said it would continue to pay good dividends for the next two years. The biggest losers were Energy, -2.75%, and Utilities, -2.57%. The Materials Sector was not far behind with a loss of -2.43%. The export-oriented cyclicals (Materials and Energy) were clearly hurt by fears of a slow-down in the Chinese economy with China pulling on monetary policy to contain inflation.

Risk Aversion returned to the market with Small Ordinaries, -2.34%; 50-Leaders, -1.31%. The China Effect, once again, was probably behind that switch to Risk Aversion.

Gold Miners (XGD) was down, -4.69%. Gold Miners has been erratic for the past eight weeks. In general terms it can be read as follows: pause week, up week, pause week, down week, pause week, up week, pause week, down week. If it follows true to form the next two weeks should be a pause week followed by an up week. If only the market was so predictable! Betting on such patterns is a sure way to go broke.

The XAO finished at 4717.7. That’s well above the August high (4616) and the 150-Day Moving Average (4581). The index finished marginally below the 50-Day Moving Average. The 4600 area still remains the critical support area. If that is broken to the downside, the market would be in serious disarray. At this stage, I still can’t see that happening.

Cheers

Red