Initial Comments, Friday, 3/12/2010

Yesterday, we were cruising down the freeway, blue skies, with the motor purring.

Today, it looked OK - but there are big storm clouds on the horizon.

The market is now short-term overbought. On the ASX-200 chart the Slow Stochastic (5,5) has now hit 80 - that's the overbought line. It can still go higher, but caution is required.

Perhaps more telling, is the %age of stocks in the 50-Leaders above the 10-Day Moving Average. It has now hit the 80% level. Again this is a short term oversold reading. It can still go higher - but above 90% is usually as far as it goes without a retracement.

Today's price/volume action suggests that some big time punters were selling into today's strength, i.e., smart money was taking profits. That may have just been a little nervousness ahead of the jobs report out in America tonight. That can move the market. But the smart money is rarely wrong. That suggests to me that at least of bit of down time action can be expected early next week.

So the next couple of days may be crucial to the health of the market. Some weakness can be expected. It's probably "buy the dips" time. But we'll just have to gauge how it goes in the next couple of days.

I'll be doing an extensive analysis over the weekend, as usual, and I'll put up a summary later in the weekend.

The Gold ETF was down solidly today. So it looks like I might have been wise taking profits yesterday. We'll see.

Cheers

Red