all ords and why the drop

As you all no doubt know, the All Ords retraced today on selling presure ahead of the weekend.

My take on this retrace is as a result of the Dow and its inability to strengthen last night.

At one point the Dow was more than 100 points off its open and only recovered to just below the previous days close. Given the weekness, this wasn't such a bad result overall.

However, the Australian market took this as a negitive, which I think was to be expected and reacted accordingly. What also did not help things to much was the fact that it was a Friday and I think people did not want to hold positions over the weekend in the event of the Dow loosing further ground tonight which is very possible.

The recovery on the Dow over the past week or so has seen thiner trade than usual, which smacks to me of nervous investors not wanting to expose themselves to any further weekness in the Dow during this time.

It is true that Wednesday on the Dow saw a marked decrease in volatility however the thiner than usual trade does in my opinion at least signal that investors remain nervous.

In the event of the Dow slipping tonight or worse, testing the lows of last week, I think we can safely call that the All Ords will follow suit.

So what is the prospect for the Dow tonight?

Our market is now closed so our positions, if you have any are locked in till Monday.

Last nights events were caused by a number of factors, however the statement made on US TV by the Country Wide CEO did not help, though talking on another program later, he did seek to clarify his earlier statement. He was very clear that Country Wide does not face insolvency and generally did his best to talk up his companies performence over the past 20 years or so. What else would you expect?

In the absence of any confidence tonight on the Dow, I am affraid Monday will be a down day for us, with stocks that have risen the highest over the past week, getting it in the neck the most.

We may see the All Ords under 6,000.