Morning Review 28/2/2011

Dow Jones Industrial up a solid +0.79%, while the Transport Index was up a supportive +0.48%. Some imbalance there, but not great.

Imbalance in the broader market was evident. S&P500 +0.56%, NASDAQ100 +0.2%, Russell 2000 +0.18%. That's not a good sign.

London -0.12%, France +0.98%, Germany +1.21%. London was the odd one out - probably a result of the fall in HSBC (-4.65%) after announcing a doubling of profit (US$19billion). But that was less than expected. So down it came.

Over the weekend I read innumerable blogs and newsletters. Many proclaimed on the price of oil - all said that oil was going higher, much higher, with one putting a price at US$300 in the near future.

The above chart of Oil shows its on a long-term uptrend. But that channel suggests we've seen the top, for now. $90 looks more likely in the near future. A break through the top of that channel would suggest much higher prices. $120? $150? Who knows. I don't. But, at this stage, I think the odds favour the shorters.

The Dow Industrial chart now faces a serious resistance level - a break of the 13-Day Moving Average would be bullish.

The Australian Dollar is once again heading for the 1.02 resistance area. A break above that would be very bullish for the Ozzie and also for our stock market.

Gold in Oz Dollars was relatively flat in the past 24 Hours.

The Australian market has a bit of catching up to do after being closed in the last hour of yesterday's trading. Apart from London, markets in Europe, America and Asia have gone up strongly since then. So a good opening is almost certain. The All Ords (XAO) closed yesterday at 4924. Next major level of resistance is 4948. That seems more than feasible. After that 4970.

Good luck

Red

Forget Today 28/2/2011

The Australian Stock Exchange shut down today at 2.48 p.m due to some technical failure. Just as the market looked like going positive. The All Ordinaries (XAO) was down at that time only 2.3 points to 4922.6.

The Nikkei was down below zero until about 1.00 pm their time and finished up +0.92%. At the time of writing, the Hang Seng was up 1.5% (near closing time).

When the ASX shut down the Advance/Decline Ratio was 1.05:1. Relatively flat, but still on the positive side. The AdvancingVol/DecliningVol Ratio was a bullish 2.18:1.

If Australia had replicated its peers in Asia (highly likely), our market would have finished solidly in the green today. Nothing spectacular, but solid.

The two most important trading periods of the day (and the highest volume) are the first hour and the last hour. In the first hour, the nervous nellies often dominate, and in the last hour, the cool heads (read institutional traders) dominate. So we missed the last hour of trading today.

Now we'll wait for the overnight action, particularly in the Middle East and North Africa.

Meanwhile, back in the Land of the Bogs (Ireland) an historic election has taken place. The Guardian had this little snippet:

Bondholders face pressure from new Irish government to share cost of bailout by taking 'haircut' on sovereign debt.

That news is probably already factored into prices on the European market, as a change in the Irish government was widely expected.

More tomorrow morning.

Good luck

Red

Weekend Summary and Conclusion 27/2/2011

TRENDS:

- XJO: long/medium-term - up.

- XJO: short-term - Down but retracement may have finished.

- Dow Industrials: medium-term - up

- Dow Industrials: short-term - Down but retracement may have finished.

- Hang Seng: medium-term trend - down. (Chinese market often leads.)

- Ozzie Dollar: Sideways consolidation. Short-term trend - up.

- Gold in Oz Dollars: Medium-term trend - up. But rally may have finished (Positive for

general market.)

XJO currently at 4837.

Major Support and Resistance for XJO: Resistance: 5000; Support 4200 .

Ratio American Bonds:Commodities - Positive for the general market

Ratio Copper/Gold, Short term down trend - may be reverting to the upside - reversion would be positive for the general market.

XJO Long-term Chart Pattern: Rising bearish wedge. Break upwards - very bullish; break downwards - very bearish. Wait and see. Probabilities for this chart pattern favour a downside break.

Any correction is likely to be muted because of Bernanke’s money supply (QE2) and the strength of the Presidential Cycle in the 3rd Year.

Next Week: Near-term favours the upside. Monday should be up. Geo-political events will determine longer term direction.

Next week - beginning of a new month. That usually favours the upside as fund-managers put new money to work.

Reading Al Jazeera shows demonstrations in Bahrain, Yemen, Jordan and Iraq. The Libyan civil war continues. Renewed demonstrations have occurred in Egypt. These events can move rapidly and move the markets with just as much rapidity.

The Game Plan:

- Seasonality favours further upside in March.

- The “overbought” conditions which prevailed in February have been eased.

- Short-term down trend seems to have finished.

- The longer term trend is up - follow the trend.

- If escalation of Middle East turmoil occurs, it will raise oil price and scuttle the longer term trend. Be flexible.

Morning Review 26/2/2011

I had internet connection problems last night, so I couldn't put up the usual evening comments. So today will try to come to grips with action in both Australia yesterday and overseas last night.

Australia, as expected, was up moderately, +0.49%. The Fifty Leaders, +0.6%. The Small Ordinaries, +0.3%. This continues the underperformance of the Small Ordinaries, something I've been banging on about for a couple of weeks. Unless the Small Ords performs well on a relative basis, breadth is lacking in the market. That's a negative.

The best two sectors yesterday in Australia were Telecoms +1.6% and Consumer Staples +1.4%. Both are defensive sectors. The worst two sectors yesterday were Health -1% and Utilities -0.8%. Both are defensive sectors. The stock market loves to play with your head.

Personally, I'd put more faith in the Small Ords number as a bearish sign.

A lot of technical damage has been done to the Australian market. But it has bounced right at the 50-Day Moving Average. That's a positive.

At this stage, I wouldn't like to bet on the upside or the downside - but, in the medium term, I'm leaning to the downside. That means a continuation short-term of this bounce and then another leg down. On the XAO (All Ordinaries) serious resistance now lies at 4950 - not that far away. If that can be breached then we're looking at 5030.

Overseas, the Dow Industrials +0.51%. The broader market was better. (See box above.) Dow Transport Index +1.04%.

Europe: London 1.37%, France 1.51%, 0.77%.

Commodities: CRB Index +1.57%. Gold in Oz Dollars fell -0.37% while in USD it rose +0.53%. That tells us that the Oz Dollar must have been strong +0.82%.

The ETF for Australian shares on the NYSE was up strongly +1.96%.

All that suggests that Australia will probably be up on Monday. Unless ........................ ??????

Good luck

Red

Morning Review 25/2/2011

Dow Jones Industrial down modestly, -0.31%. It finished at 12069 after dipping marginally under 12000 in early afternoon trade. So - a good recovery. Dow Transport Index up +0.45%.

The S&P 500 finished marginally down -0.1%. Nasdaq100 +0.54% and the Russell 2000 +0.57%.

So - breadth was good after the market recovered in afternoon trade.

France -0.09%, London -0.06%, Germany -0.89%. The German market was the odd man out today. There must have been some specific cause of that which I haven't been able to ascertain.

Gold in Ozzie Dollars fell heavily in late trade. Rumours were circulating that Gaddafi was dead and that took the risk premium out of the Gold market. The sign was on the wall in Australiayesterday when the Oz Gold price fell heavily during intra-day trading.

I think we can expect today to be up.

Will this be a proverbial "dead cat bounce"? Probably. I think enough technical damage has been done to the markets to suggest the probabilities next week lie to the down side.

But let's wait and see. A break below 4900 on the XAO would be bearish in the medium term.

Good luck

Red

Market Comments 24/2/2011

The market was down modeately today -0.7%. We're still not seeing any panic selling.

Volume was above average and the market finished close to its lows.

A number of factors are coalescing today to suggest that this is the point at which a bounce should occur.

1. The market hit the 50-Day Moving Average. That has held the market since this rally began in December 2010.
2. The chart is at the long-term up-trend line.
3. 4900 on the XAO is a strong horizontal support area and
4. Big round 00 numbers are psychologically important.

That's a quadrella.

Action today saw more supply come into the market. Were the strong hands buying? Yesterday it looked likely. Today, with a close near the low and heavy volume? We won't know till tomorrow. If tomorrow is a strong rebound - then yes they were buying.

It is often the case that a strong down day closing near the lows on heavy volume conceals a lot of buying - but you don't know until the next day. Did today exhaust the sellers? It's likely.

Let's look at breadth to see if there is support for this hypothesis.

Advance/Decline Ratio for the past three days:

1. Tuesday 0.46
2. Wednesday 0.64
3. Today 0.82.

Today was still bearish - but momentum is clearly declining.

AdvancingVolume/DeclineVolume Ratio for the past three days:

1. Tuesday 0.63
2. Wednesday 1.04
3. Today 1.47

The ratio has clearly switched over to the bullish side. That suggests to me that a lot of buying occurred concealed by the down-day stats and volume.

I'll leave it at that for now.

There are no guarantees, but I'll be surprised if tomorrow is another down day.

The current level looks to me like a line in the sand. If that breaks significantly tomorrow, then we might see some panic start. And when that happens, it's not a pretty sight.

A bounce here seems to me to be the most probable result tomorrow. After that - well ... QE2 still dominates the scene in America. :)

Good luck

Red

Morning Review 24/2/2011

The Dow Industrial Index was down -0.88%. The bulls attempted an afternoon rally but it petered out in the last hour. The chart is now clearly below the 13-Day Moving Average, the first time since this rally began in early December, 2010.

The S&P500 was down -0.61%. This broader market index performed a little better than the DJIA, but not a lot. The Russell 2000 was down a bearish -1.64%, and the Dow Transport Index was hit by a surging oil price, down -2.1%.

Europe was just as depressing. France -0.92%, London -1.22%, Germany -1.69%.

Gold in Oz Dollars rose +0.45% in the past 24 Hours. Good for the Gold ETF on the Ozzie market, but it has bearish tones for the general market.

There were signs of optimism in the Australian market yesterday. That carried over to the EWA (ETF for Australian Shares on the NY Stock Exchange). It was up +0.39% last night. The Ozzie Dollar was also up a little last night, +0.27%. So today, the Australian market may not do quite as badly as some might expect.

We shall see.

Good luck

Red

Market Comments 23/2/2011

This now looks like a short term bottom.

Who was selling today? The scardy cats, Johnnie-come-latelies. Who was buying today - hoovering up all those shares? Seems to me it was the strong hands who started this selling.

Also - a lot of stocks reached important support today; e.g., CBA today had a low of 52.80, the high on 25/1/2011 was 52.82. The high on 2/2/2011 was 52.85. And that's also a nice ABC retracement for CBA.

Given that today's candle was a shooting star (on high volume) and also a relatively narrow range bar - and you get the final piece of the puzzle.

Considerable technical damage has been done to the index:

1. MACD Histogram is below its zero line
2. RSI is below its mid-line
3. Directional Indicator Histogram is below its zero line.

That's the trifecta of technical indicators.

So. We have what looks like a short-term bottom.

A short-term uptrend now looks on the cards. But I won't be counting on it to sustain into new highs.

We shall see.

Good luck

Red

Morning Review 23/2/2011

Dow Industrials down -1.44% and broke below its 13-Day Moving Average. Still above its Super Trend line. Dow Transports down -3.83%.

Because of the blue-chip nature of the Dow Industrials we can expect it to perform better than other more broadly based indices. S&P500 down 2.05%. Russell 2000 down 2.62%.

This is not a pretty picture.

In Europe, London down -0.3%, Germany down -0.05%, CAC down -1.15%.

In the past 24 hours, Gold in Oz Dollars rose 0.3% while Gold in U.S. Dollars fell 0.58%. The differential was caused by a big drop in the Australian Dollar, -1.56%.

It's hard to see how our market can recover today - but it may not be as bad as a lot of people expect (see London and Germany above).

Good luck

Red

Market Comments 22/2/2011

Today the XJO (ASX200) finished at 4857, down -0.88%. Well - I don't need to tell you that things don't look too flash>:)

OMG! Two days down and we think the world has ended. >:)

So how bad is it?

Here's the negative side:

1. Intermediate term resistance held on Monday.
2. Major support broken today. (See blue line on chart above.)
3. MACD Histogram broken below Zero.
4. Williams %R below mid-line.
5. RSI close to breaking below mid-line.
6. Directional Movement Histogram (not shown on chart) broken below Zero.
7. Index is significantly below the 13-Day Moving Average now at 4904.

What does that mean? Simply - we're in a short term down trend.

What's the good news?

1. Index is above the Super Trend Line
2. Index remains in a long-term up-trend.
3. The Index remains above the 65-Day Moving Average currently at 4764

The buy-the-dip crowd are salivating - but they might have to wait a while longer.

Small Ordinaries today was down -1.3%. Worse than the XJO at -0.88%

Until we see that downtrend line on the XSO:XJO ratio chart (lowest pane) broken to the upside, I think we'll see further weakness in this market.

Good luck

Red

Morning Comments 22/2/2011

The American market was closed last night for the President's Day Holiday. (No, not Obama, Washington.)

Following the Australian lead, the London market (FTSE100) was down -1.12%. As shown above, the London market is close to moving into bearish territory. The daily candle is below the 13-Day Moving Average. Both the MACD Histogram and the Directional Index Histogram are close to moving below Zero. The RSI is just above its mid-line.

Germany (DAX) was down -1.41%, while France (CAC) was down -1.44%. Both of these indices are coming off higher levels than the FTSE so the indicators are not quite as negative.

Gold in Ozzie Dollars had a good night, up nearly +2%. Oz Gold had a double whammy with the price of gold in U.S. Dollars rising sharply and the Ozzie Dollar falling over -0.5%.

Today? Dunno. Probably flat - unless something very dramatic happens in the Middle East. Ozzie Futures are currently up three points.

Good luck

Red

Market Comments 21/2/2011

The market today was down moderately: XJO -0.7%. Volume was much higher than the 50-Day Average. Given that Monday tends to be a light volume day - that makes today's volume even more significant.

Indicators based on the XJO are on the verge of turning bearish. You don't need me to spell it out - just take a look. MACD Historgram and Directional Indicator are close to crossing below their Zero lines. Given today's downward momentum on above average volume, it seems highly likely that those indicators will cross below their Zero lines. That's bearish.

But - have a look at the Small Ordinaries. Why? The Small Ordinaries give us an idea of "breadth". Unless a move upwards in the market is broad, it's being carried upwards by fewer and fewer shares. Eventually, unless breadth improves, the market must fall.

The Chart of the Small Ordinaries shows that, relative to the XJO, the Small Ordinaries has been falling since the beginnine of 2011. The bottom pane tracks the relationship of the Small Ordinaries to the ASX200 (XJO).

Now - there are no givens on the stock market. But, if breadth is falling, and the market falls on above average volume ..... what's the conclusion?

Good luck

Red

SUMMARY & CONCLUSION week ended 18/2/2011

TRENDS

- XJO: long/medium-term - up.

- XJO: short-term - Up

- Dow Industrials: medium-term - up

- Dow Industrials: short-term - up (now in Cloud Cuckoo Land)

- Hang Seng: medium-term trend - down. (Chinese market often leads.)

- Ozzie Dollar: Sideways consolidation. Short-term trend - up.

- Gold in Oz Dollars: Short-term trend - up. (Negative for general market.)

XJO currently at 4937.

Major Support and Resistance for XJO: Resistance: 5000; Support 4200 .

Ratio American Bonds:Commodities - Positive for the general market but showing possible signs of weakening.

Seasonalities for February in 3rd Yr of Presidential Cycle favour the upside.

XJO Long-term Chart Pattern: Rising bearish wedge. Break upwards - very bullish; break downwards - very bearish. Wait and see.

Fundamentals (Shiller CAPE) favour a 100% cash allocation of assets.

Next Week: The probabilities for a down side correction have increased.

Any correction is likely to be muted because of Bernanke’s money supply (QE2) and the strength of the Presidential Cycle in the 3rd Year.

Monday in America is a holiday. Expect our market to be flat. Tuesday’s market may determine the direction for the rest of the week.

Morning Review 19/2/2011

The Dow Industrial Average was up +0.59%. But that was an anomaly as the little grid shows.

Nasdaq 100 was actually down a little -0.21%; SPX up a little +0.19% . Dow Transports was flat -0.04%.

The Dow Indu data hides some problematic information. Advances/Declines ratio was 1.9:1, but DecliningVolume/AdvancingVolume was 2.2:1. There was a lot of selling going in in those Decliners.

A similar (but not as marked) inverse relationship occurred in the SPX with Adv/Decl Ratio 1.4:1 while DeclVol/AdvVol was 1.3:1.

The Dow Industrials came in with a Trin higher than 4. Trin is calculated as follows:

(Advances/Declines)/(AdvancingVolume/DecliningVolume).

A figure in excess of One is considered bearish. So the Trin on the Dow Industrials for today was very bearish despite the apparent bullishness inferred from the rise of 0.59%. hmmmm.

Gold in Oz Dollars for the past 24 hours was flat, 0.06%; once again held down by a modestly strong Australian Dollar +0.31%.

I'll put up the summary for the past week later tomorrow, Sunday.

Good luck

Red

Market Comments 18/2/2011

The week has ended with a fourth day of narrow range trading. Three of those days were on low volume (including today). Yesterday was high volume - distorted by options expiry.

The RSI is flat lining at 66.9 - high, but well under the American Index S%P500 which is at an insanely high 76 and has been around those levels for some time.

Breadth was good.

Nothing much more to say.

The trend is up - and doesn't look like reversing, yet.

Those volume figures are a worry. :)

The U.S. market is still in Cloud Cuckoo Land.

Here's a snippet from Dave Rosenberg, my favourite huggie bear:

Reading a Bloomberg news story this morning, we were reminded that you have to go back 40 years to see the last time the U.S. stock market surged as much as it has in the past six months with such little volatility and opportunities to buy on dips along the way. In other words, this is not a normal market by any means, having been a virtual straight line up ever since Mr. Bernanke announced QE2 in late August. And the same institution that conducted the survey above also just published a report concluding that the Shiller cyclically-adjusted P/E ratio is a relic and not to be relied upon as a valuation tool — perhaps because it is now suggesting that the market is 30% more expensive relative to historical norms.

Sweet dreams

Red

Morning Comments 18/2/2011

The Dow Jones Industrial Index was up modestly, 0.24%. The Transport Index was up the same amount.

SPX was in line while the Russell 2000 was up strongly.

The odd man out was the Nasdaq 100, down marginally at -0.02%. This was largely due to a fall in the price of Apple -1.33%. Rumours are floating around about Steve Jobs' health which probably impacted Apple's share price. Rumours are just rumours. Steve Jobs is on Obama's list of technology executives he will visit during his Western tour.

Last night repeated the ongoing theme of the recent past. The market gaps down on opening, then recovers with a solid upward movement for the rest of the day.

The European markets were flat. French and London Indices both up +0.03% while Germany was down just -0.12%.

Gold in Oz Dollars over the past 24 hours was down a little -0.24% while Gold in USD was up +0.65%. Oz Gold was tracking US Gold until about 9 a.m. (US time) then carked it. Obviously something shot Oz Dollars upwards (dunno what) which put the kybosh on Gold in Oz Dollars.

The American market remains in Cloud Cuckoo Land with the RSI well above the 70 level. What's sustaining it? I dunno. Look at the volume - dropping away.

Today - our market? Probably another flat day. Unless there is a belated reaction to that Moody's downgrade of our four big banks. The CRB was up strongly again last night, so our Materials sector could carry the market higher today.

Just stepping back from the day-to-day stuff, have a look a the top chart. It's a ratio chart of the Emerging Markets ETF and the S&P500. Scary stuff. If the Emerging Markets (particularly China, India and Brazil) are expected to be the engine for the world economies, those stock markets are saying the engine is in reverse.

Good luck

Red

CBA Chart of Interest for 17/2/2011

After reporting a stellar result last week, and gapping up, gapped down on Monday leaving an "island reversal". It's now consolidated this week at this lower level well under the island reversal.

Thursday saw a downgrade of the four big banks by ratings agency Moody's. After reading that news I thought the Ozzie banks would fall heavily. CBA was flat yesterday. (So much for what I think.)

CBA is now at a critical support level (horizontal and oblique).

On Tuesday CBA fell below horizontal support and recovered on Wednesday - and would have shaken out a lot of shorts.

Friday's action will be interesting. A big day up and the stock could be looking at testing the recent high and negating the island reversal. A big day down - and I think CBA could be looking at a lot lower.

Given the overnight action in America on Thursday night - CBA will probably be flat - and keep us in suspenders for a while longer. :)

Good luck

Red

CSL Chart of Interest for 17/2/2011

CSL broke key support levels on Thursday on very heavy volume (see lower pane). It was down -4.83% after a big reversal day (up then down) on Wednesday, on heavy volume.

This may have reversed the strong long-term up trend in place since October, 2010.

Given the ferocity of the action in the past two days, some sort of kneejerk reaction back up is likely. A test of resistance around the 36.50 area and then a further drop could see CSL drop down to test 34.50.

But the action of the past two days certainly looks unhealthy for the medium term.

Good luck

Red

Market Comments - 17/2/2011

The market was flat today for the third day running. For the pedants, the XJO was up 0.2%. A marginal increase by anybody's language.

Now, let's put this into context. Remember what happened on the American market last night. S&P500 up +0.63% and the London FTSE was up 0.8%.

Next, have a look at the volume today. Volume today was nearly 50% above the 10-Day Average. hmmm.

A lot of effort for not much result. There was a lot of buying going on today - and a lot of selling into that buying.

I'll let you guess who was doing the buying and who was selling to them.

Remember - we're at the top of a trend. Who buys at the bottom of a trend? Who sells at the top of a trend?

Quote for the day, "The Stock Market is an exquisite mechanism for transferring wealth from the many to the few." Actually - I just made that up. :)

Not much else to say today.

Good luck

Red

Morning Comments 17/2/2011

The Dow Jones Industrial Index was up moderately, +0.5% after getting a bit of a shock from some news about Iran warships travelling via the Suez Canal to Syria. The market said - "Who Cares?" and went right back up to where it was earlier.

The Dow Transport Index was up a strong +1.04% and has now shaken off concerns about it tanking while the Industrials continued higher.

The Russell 2000 (+1.02%) outpaced the S&P500 (0.63%), confirming the underlying strength of the market.

The only fly in the ointment was the VIX, went up 2.14%. The VIX tends to trend inversely to the general market and often when it is up when the S&P500 is up, the market is down the next day.

Gold in Ozzie Dollars dropped suggesting that the Gold ETF on the Australian market will give up some of yesterday's gains - and be a positive for our market today.

The historical chart above of returns on the American market is scary from a contrarian point of view. The Americans have doubled in the past 102 weeks, something that hasn't happened since the Depression Era of the 1930's.

The American Market is still in Cloud Cuckoo Land. :)

Good luck

Red

Market Comments - 16/2/2011

The market today was flat. I mean ... FLAT. The XJO was down -0.02%. Volume was again quiet.

I've suggested before that this combination of a quiet market at the highs on low volume is bearish.

The internals today don't support that. Advance/Decline Ratio on the 50-Leaders was 1.8 and the AdvVol/DeclVol Ratio was also 1.8. There's not much solace for the bears in those figures.

The big drag on the market today was BHP (-1.6%) on heavy volume. The sell-off in BHP might have been a knee-jerk reaction, and the smarties were in there buying. We'll know tomorrow.

Follow through selling would be a big negative. A rebound tomorrow in BHP and this bull market remains alive.

Good luck

Red

Morning Comments 16/2/2011

The Dow Jones Industrial Average was down modestly (-0.34%). On the plus side, the DJ Transport Index was up modestly (+0.25%).

The other major indices that I normally cover were down with the Russell 2000 the worst of them (-0.62%).

Last night was "different". In recent days, the market has tended to gap down at the opening and then the bulls have pushed it up to finish positively - or at least a lot better than the opening down move. Last night the market gapped down (as per usual) but then travelled sideways. The weight of sentiment has moved just a little to the bear side with last night's action.

I still wouldn't read too much into last night, just yet. The major indices are still in up-trends. Until there's a clear break to the down side, the trend remains up. :)

The copper action was a bit more decisive. It was only yesterday I pointed out that copper was in a speculative bubble. Last night, it was down -2%, but look at the volume! Talk about rats leaving a sinking ship. Again - it's only one day's action. But the punters are getting nervous. I think there's probably a bit more in the copper run - but last night's action gives a taste of what will happen when the bubble finally explodes. And it won't be pretty.

Gold in Ozzie Dollars is up +1.47% in the past 24 hours. Given that the Gold ETF was up 0.34% yesterday in Australia, we can expect some solid catch up today in Australian trading (barring an unexpected pull-back).

Remember - Gold in Ozzie Dollars tends to trade inversely to the general Australian market.

Good luck

Red

Market Comments - 15/2/2011

There's not a lot to say tonight. The market was flat with the XJO down -0.1%. Volume was lower than average.

On the overall market, Advance/Decline Ratio came in at 1.08 (flat) while on the 50 Leaders it came in at a slightly bearish 0.84.

The best two performing Industry Sectors were Health (+0.5%) and Consumer Staples (+0.5%). The two worst performers were Information Technology (-0.9%) and Financials (-0.4%).

It's difficult to read much of anything into all of that - maybe slightly bearish - but that's stretching things.

There was certainly no real urgency in the market to capitalise on yesterday's big gain (on lowish volume). Volume was lower again today.

If anything, the action of those two days on low volume is a negative rather than a positive.

Given that the market is close to an important resistance area, it's going to take effort to push up through that. And that effort just doesn't seem to be in the market at this stage.

But all of that could change tomorrow.

Let's see how tomorrow pans out. A big day down on higher volume would be very bearish.

On the other hand, a big day up on high volume would be very bullish.

Maybe, we'll just get another lack lustre day. And make us wait. :)

By the way - that's not a prediction - just the way the Market Gods seem to enjoy torturing us. :)

Cheers

Red

Solar Storm 15/2/2011

This is the second time 10 Days that I've received an alert of a Solar Storm from the Rise Space Institute.  The effects of Solar Storms can be acute - the most obvious effect is on a visually magnificent display of Aurora.  More intense effects can be felt on the communications system and the electrical system, with widespread blackouts often occurring.

Less well known is their effect on human behaviour and, in particular, stock market decision making:

The geomagnetic storm signature can even be found in financial decision making reflected in stock market transactions. In an innovative study by Krivelyova et al., evidence of substantially lower returns around the world during periods of geomagnetic activity was uncovered. The small capitalization stocks being affected by geomagnetic storms more than large capitalization stocks. Small caps are held primarily by individual investors.  (Krivelyova, A., and C. Robotti, (2003) Playing the field: geomagnetic storms and the stock market, Federal Reserve Bank of Atlanta, Working Paper 2003-5b, October 2003.)

Following are the alerts that I received:

1.  This alert is from the Rice Space Institute issued on Fri Feb  4 19:20:01 GMT 2011  ACE Solar Wind observations warrant condition RED  

2.  Trigger Boyle index (kV): 212.120000This alert is from the Rice Space Institute issued on Mon Feb 14 19:50:01 GMT 2011  ACE Solar Wind observations warrant condition RED  Trigger Boyle index (kV): 234.090000 

Copper Weekly, 14/2/2011

The weekly chart of Copper futures shows that Copper is in a strong uptrend.

Now look at the bottom pane. Volume since the beginning of 2011 has been going up exponentially.

Copper is in a speculative bubble. Bubbles can last longer than we can imagine - but, in the end, they end ka-boom.

Given that copper has a strong correlation to the S&P500 Index, well ........ ?

I'll leave that with you.

I'm now thinking of changing my pseudonym to Dr Doom - but that's already taken. :)

Good luck

Red