Be Wary of the False Break

by Gary Glover

Our index has rallied hard over the past fortnight to retest the previous swing high in October.  Historically after a deeper than normal pullback our market likes to go then back and retest the highs and make marginal new highs.
 
The speed of this current rally is not unusual, look at end of 2009, 2nd quarter of 2010, 2nd quarter of 2011 and 2nd quarter of 2012.  All these rallies were fast explosive rallies that ended in a false break and a strong reaction to the downside.
We need to be very cautious here, a bearish reversal and a false break of the high will be confirmation that a corrective process could be underway.

Disclaimer

Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.