By MoneyMorning.com.au
A potential IMF $600 billion bailout loan for Italy and US shoppers spending up big on ‘Black Friday’ was all the Aussie market needed yesterday to finish 1.5% higher.
And thanks to the Dow’s spectacular 2.5% gain Monday night, odds are the Aussie Stock Market will finish today up as well.
But don’t get your hopes up, ’cause this might not be the start of the Santa of rally.
According to Murray Dawes, editor of Slipstream Trader, this pickup in the volatile market is one last gasp before we see a sell-off.
In his free weekly stock market update last week on YouTube, Murray said:
‘We may see an attempted rally from 4050. In fact it may even get back to the ten day moving average. The best outlook would be for the market to reach the point of control of this structure, which is 4200.
‘After that point been reached, I’d expect to see it turn back down again.’
Yet, the market heading south isn’t the only problem.
For this time of year, the market volume is extremely light. Normally it averages about $6 billion-worth each day. However, the Australian stock market has traded somewhere between $3.5-$4 billion a day in the last couple of weeks.
So who’s in the market? The short answer is not the big boys.
Most trades, as far as Murray can tell, are coming from high frequency trading and retail investors. Meaning, the fund and hedge fund managers are sitting out of the Australian market right now.
Simply because they don’t know which way the Aussie market’s going. No-one’s willing to take a big position until there’s a clear the direction from the market.
But Murray’s pretty sure he knows which way it’s going. He says:
‘It’s all rolling over. If the S&P/ASX 200 cracks below the 3800 zone that tells me that the whole distribution from the last few years has failed.
‘And that’s when the market will look really scary.’
Shae Smith
Editor, Money Morning
P.S. Don’t forget to check out Murray’s free weekly stock market update on YouTube every Wednesday afternoon. Click market update for last week’s video. Plus if you subscribe to his YouTube channel you’ll be notified when the next video is posted.
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