A line in the Sand? 3/3/2011

Unless I'm watching some sort of weird Maxwell Smart movie, a definitive line in the sand was drawn today.

There's not much in the above chart to suggest anything out of the ordinary. But if you check the volume stats (which won't be done by the talking heads), you'll find that the volume on the All Ords (XAO) today was the highest since the 15 May 2010. That ended the big correction from mid-April 2010 and included the fear aroused by the infamous American "Flash Crash". That occurred on 6 May 2010.

Today was a narrow range bar inside the bar from yesterday. Technical analysis usually ascribes this action to "uncertainty".

Well - today's action was more like the clash of the titans, without either side giving an inch.

Tomorrow should tell us which side wins. Big move up - the bulls win. Big move down - the bears win.

The XJO chart (above) is sitting right on the 65-Day Moving Average. That's often a significant "line in the sand".

The only indication on this chart that a reversal might be on the cards is the positive divergence of the Williams %R from price. It's quite small and over a narrow period of time. That's not a lot of evidence - but better than the other way around. :)

Let's see how tomorrow pans out. If I was a betting man, I'd be betting on the bulls.

Good luck

Red