Market Comments 23/12/2010

You just have to love the stock market.

The early November highest close on the ASX 200 (XJO) was 4800.6. The closing high today was 4799.0. The XJO tried valiantly today to close at a new high - but just fell back under the bench mark right at the end of trading.

I can't read anything into that but bearish sentiment.

Some of the boyos tried to make it close higher. But others dropped it back in the last hour of trade.

Who represented the "smart money" - I'd be betting on the people who engineered the sell-off in the last hour of trade.

That sell-off suggests to me that a bearish sentiment is lurking in the background of the market.

The three big East Asian markets were all down today. Japan, -0.23%; Hang Seng, 0.62%; Singapore, 0.21%. Sentiment and volume is less affected by the seasonal influences of the Festive Season and may have an moderating effect on sentiment in the Western markets

If tomorrow is down - that would confirm the thesis. We shall see.

Now - to the health of individual patients.

Stocks on Life Support (RSI below 30): None.

(I think the nursing staff is doing everything possible to get them all home for Xmas.)

Stocks on the Critical List (RSI above 30 but below 40):

Leighton, Mirvac, Qantas, Stockland, Suncorp Metway, Toll Holdings.

Stocks looking buff - working out in the Gym. (RSI between 60-70):

BHP, Brambles, Commonwealth Bank, Computer Share, GPT, Insurance Australia, Macquarie, Origin Energy, Oil Search, QBE Insurance, Santos.

Stocks on Steroids. (RSI above 70 - ignoring stocks boosted by a takeover offer):

Bluescope, Lend Lease.

I'll try to get something out tomorrow on the market - Xmas Eve. (I'm waiting with bated breath for tomorrow to see what the boyos can do with a shortened trading day and low liquidity.)

Given the news just in on Ireland (bank taken over by the government), and Hungary (credit rating downgraded by Fitch), there's sure to be a negative reaction in the American futures market. Whether or not it will be just a knee jerk reaction, or a reason to provoke a sell-off is still to be seen. Maybe the American market will just shrug it off after a short-lived downward movement.

Best of luck - enjoy the Festive Season

Red