Australian Stock Market Summary. week ended 14/1/11

•XAO: +2%%

•Best Performing Sectors: Consumer Staples, +3.5%, Telecoms, +3.2%

•Worst Performing Sectors: Utilities, +0.3%, Health, +1.2%

•Risk Appetite: Small Ords (+2.6%) outperformed Fifty Leaders (+2%) - Bullish appetite

•Gold Miners: +0.2%

•Property Trusts: +2%

•Materials: +2.3%

•Financials: 1.7%

•XAO - long/medium/short term trends: Up.

•Dow - long/medium/short term trends: Up

•Shanghai - Medium Term Trend Down

•Bombay stock market down sharply over past two weeks.

•Asian nations (e.g., China, South Korea, Thailand) imposing anti-inflation measures (negative for world growth)

•Ben Bernanke’s QE2 program will probably sustain the American market in the long term.

•Seasonality - week after Martin Luther King Holiday in America is usually bearish (see chart below)

•Best performing sectors this week were both Defensives. Not what you expect on a strong up week.

•To me, this week’s rise looks like strong hands selling to weak hands. Thursday - big up-day on big volume, XAO finished at the top of its range. Friday, small up-day on light volume. Classic selling into strength on Thursday - few buyers left on Friday.

•I expect our market to be lower by the end of the coming week.