Today the XJO (ASX200 - chart above) finished up +0.3%.  Today was a reversal day upwards on heavy volume.    

Other major indices today:

• XTL  (Twenty Leaders) +0.4%
• XFL (Fifty Leaders) +0.2%
• XFJ (Financials) -0.1%
• XMJ (Materials) +0.8%
• XSO (Small Ordinaries) +0.8%

The best performing Sectors today were Telecommunications  and Energy, both up +1.4%.  

Technical Comment on the ASX200 Market:

1. The Index is below 50-Day MA and the 13-Day MA.  Negative.
2. Indicators:
• Slow Stochastic 10.2 and falling.  Oversold.
• The 13-Day MA is above the 50-Day MA.  Positive
• RSI below its mid-line, now 41.6.  It's now back above the caution zone for shorts (30-40).  it still needs to rise above 50 for the longs to be comfortable.
• MACD Histogram below Zero.  Negative. 
• MACD at the Zero line.  Neutral 
• CCI -171.1 and rising.  it needs to rise above -100 for a buy signal.
3. Volume was high and increasing - a positive on a reversal day.

In the 50-Leaders the ratio for Advancers and Decliners was 0.75:1 - mildly bearish.  The A/D Ratio for the general market was 1.2:1 - mildly bullish. 

There were several things to like about today's action.  A reversal day upwards on heavy volume is probably a sign that this retracement is over.  Small Ordinaries were strong and there was strength in the Advancers/Decliners ratio.  I mentioned yesterday that I thought there was buying in the background.  That was borne out today.

The strength of this rebound will tell whether or not this is a dead cat bounce generated by the "buy the dips" mob, or just a pause in a further large decline.

The retail investors have become conditioned to "buy the dips".  They may be right.

But there are a number of tell-tale signs that the market is reverting to a medium term bearish trend.  The Small Ordinaries, while strong today, have generally been under-performing  the 50-Leaders.  That's a tell-tale sign.  The Telecommunications sector which has been one of the worst performing sectors over the past year, seems to be gaining strength relative to the general market.

Today's strength was located in the Materials and Energy sectors.  The same strength wasn't seen in the Financials.  I would have liked to have seen strength in all three sectors.  But maybe you can't get all your wishes in one day.

Formidable resistance lies overhead.  If that can be overcome, then my concerns will have been short-lived.

Today was promising.  The bulls will be celebrating right now and looking forward to further rises.

We shall see.

Good luck

Red