Before the Market 27/1/2011

The Dow Industrials was up just +0.07% last night.

Ignore that. SPX +0.42%, Russell 2000 (Small Caps) +1.76%, Nasdaq +0.74%.

Not a bad night. The Dow Industrials tentatively peaked above 12000 then pulled back to finish at 11985.4. Maybe that's significant. Those round numbers often present as important turning points. Given that the market has had a great run, last night's action on the Dow could be portentous. In saying that, I still have in mind the Bullish Percent Chart for the SPX put up yesterday which is giving a sell signal.

The little spread sheet at the top of this morning's blog shows that, while Australia partied, the rest of the world (except for Japan) had a bullish time.

Of most concern for Australia today is the Industrials Metals Chart above. Last night was positive - but a very short stumpy candle inside a very large down candle the previous day.

The chart has also broken down below a strong support level and shows a clear double top. On the plus side - the chart is getting down close to the support of the 50-Day Moving Average.

Today's opening should have a knee-jerk reaction upwards on the opening, but deeper concerns could take over from there. Australia often takes its lead from overnight markets for the first hour or so - but what happens after 11.00 a.m. (AEST) often determines the direction for the rest of the day.

I don't pretend to be a day-trader - I leave that to smarter people than I. (Or maybe it's dumber?) So I'll just wait and see today and how it affects the over-riding trend. It is also options expiry day today - so expect the unexpected.

But that big dark candle on the Industrial Metals chart (two days ago) could be an over-riding influence.

Good luck

Red