Today's action was strong to the upside. The XJO was up 1.1%. Volume was a little low - but that's normal for a Monday. Advance/Decline ratio was strong at 1.5.But - really - did anything much change? The action today took the market back up to the oblique resistance line on the XJO chart. That remains the critical line.
The Small Ordinaries were up today 0.9% - but just a little below the general market.
The Mansfield Relative Strength Indicator is something I want to point to. Relative to the XJO, the Small Ordinaries is in a down trend. A strong market needs to be supported by breadth. It can continue to go up on the strength of some strong big caps, but in the end, the market will fall if not supported by breadth in the underlying market. Currently that is not there.
That doesn't mean the market must fall tomorrow. And breadth can recover.
At the moment - the negative divergence in breadth is a worry.
Have a look at the chart of CBA. That's a big negative - and a big negative for the market.
Before the market opened today, I thought that today we'd see something like that for Westpac.
But no - it was the market leader in the financial sector that carked it. After a great run-up - we're now looking at a clear reversal pattern. Maybe support will hold. We'll see.
In the meantime - the market is at resistance. Until that breaks to the upside, I think the probabilities lie to the down side.
Good luck
Red
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