Postprandials Tuesday 12/3/2011

When the bear attacks, he doesn't much about.

XJO down -1.46%.

Technical Comment on the Australian Market (XJO):

1. Clear reversal of trend with break of uptrend line.
2. For a clear medium term "sell" signal I like to see five indicators in sync:
• Slow Stochastic below 80 (condition not met)
• Break below the 13-Day MA (condition not met)
• RSI below its mid-line (condition not met)
• MACD Histogram below Zero (condition not met)
• CCI below 100 (condition met)
3. Volume was high - at this stage in a trend that adds to the significance of today's falls
4. Significant horizontal support in 4800 area.
5. 50-Day Moving Average currently at 4808.  That might provide support if this market continues to fall.

Although the conditions for a medium-term sell signal weren't met today - I have little doubt that they will be.  Today's decline was ferocious - coming after the bizarre days trading the day before - that leaves little doubt that the smart money is out.  They were out on Monday.  :)

Tomorrow could see a reactionary rebound - but I believe that is all it will be - if it occurs.

Best of luck

Redb