tuesday's diamonds, page-60

XJO (ASX200) +1.5%
XTL (Twenty Leaders) +1.3%
XFL (Fifty Leaders) +1.4%
XFJ (Financials) +1.8%
XMJ (Materials) +1.7%
Energy +1.3%
XSO (Small Ordinaries) +1.5%

A reversal day on low volume. Traders didn?t want to step up and buy today, but selling was muted. The next few days will be important.

The Advance/Decline Ratio was bullish at 1.7:1. On the 50-Leaders it was 1.6:1. Nothing much wrong with either of those figures and supportive of each other.

The big losers today were: Consumer Staples -0.7%, Energy -0.7%, Health -0.7%, Telecommunications -2.5%. Three out of four of those are defensive sectors. The big drivers of the Australian market are Energy, Materials and Financials. Both Materials +0.4% and Financials +0.6% fared quite well. On balance, today?s action wasn?t too bad.

But ? a reversal day on low volume can?t be ignored.

INDICATORS:

RSI.9: 54.8. Positive.
MACD Histogram above Zero. Positive.
MACD below the Zero line. Negative. Showing a ?bull shoulder?. Positive.
Stochastic: 78.6. Positive. Close to overbought and stuttering.
CCI.14: +95.8. Positive. Close to overbought and stuttering.

The market needs to get above 4300 for a 1/2/3 reversal upwards. Today it crept above that level and then said, Naahhh. And fell back. The XJO finished at 4269.2

You have to love this game. It has an awesome, enthralling beauty.

(Sorry ? got carried away there.)

I think we can expect a few days of downward pressure. The market was close to overbought, hit resistance and fell. The intensity of the (predicted) fall and the degree of volume behind it will determine whether the market tests the August lows, or heads up on another bull leg.

A break above 4300 would be bullish. First support at 4080, then 3980.

Good luck
Redb