The Brains Trust, page-13550

There are times when I am writing these notes every day that I would prefer that my predictions were wrong. Today is very much this situation when we are faced with an array of negative news from overseas.

Wall Street corrected with the Russell 2000 coming off slightly after five days of consecutive rises. Looking across all the sectors, there is enough there to make me think that their market could still have more in it. Prices coming off slightly like this looks a bit constructive. We did have new highs earlier in the week in the Russell 2000 and Trannies – both of which are good indicators for the market. Need a couple more days to make up my mind.

US dollar rallied as expected. Probably holds the key to everything so we need to watch how it behaves on this bounce which has initially caused havoc across commodities. I mentioned yesterday that I would like to see gold come off and do a bit more work to confirm the recent low. Seems intent on doing precisely that. I think I would have been happier if GDX (gold stocks) wasn’t in the top volumes on the NYSE overnight. US farmers won’t be happy when they see what soybean futures did in the latest session. Mind you, nor will Australian farmers. Just a bit more collateral damage that some people don’t seem to care about.

And talking of collateral damage - there were some serious falls across our leaders yesterday – and why not when faced with the ridiculous situation the market has to now comprehend. “A form of madness” a comment from the Prime Minister which seems to be apt. What is a particularly sad – perhaps frustrating would be a better description – is that the midcaps were trying so hard and even touched a new all-time high early in yesterday’s trading. BHP has now been going sideways since May – we have to hope it doesn’t break down. From where I sit and looking across all the charts on our market, we now - more than ever - need the US market to break topside and have a strong move otherwise our market could be in really serious trouble.