redbacka report.week ended 19/2/10, page-23

Hi, Red,

I very much enjoyed your description (on your blog) of 'pass the parcel'.

I've been in and around markets for 50 years, and have always believed that the most important indicator is 'price + volume'.

Take your BHP chart, for example. If the sp price approaches a previous high, but volume is lower, that's a BAD SIGN.

In general, it's my belief that unless the current market rally gets some legs on real volume, it could well peter out.

The other thing I look at is the risk/reward ratio.

What's a realistic upside target for BHP, for example, and what's the downside risk?

At the lows, I thought the odds were all in favour of reward and there was very little risk.

Now I'm thinking that the odds have swung in the other direction.

As you say, though, each investor has to make his/her own assessment.

I'm carrying quite a bit of cash in a long term investment portfolio, and will continue to do so until I'm clearer about where we're going.

Thanks for your good work which is much appreciated.

Kind regards