Daily Murmur 08/11/10

by Gary Glover

 Breaking above the previous high was very significant and passing the October time window was very important in my opinion as it cancels out a very bearish set up.  Now we have broken above a key resistance point normally we should rally 1/4 of the range.  Other possible resistance points include 1/8, 3/8 or 1/3 of the previous range.  As you can see these ranges have been relevant so far and the last pullback 1/3 of the range is the most relevant so that makes the 12800 level going forward very important.
My only concern with the most watched stock index in the world is not what it is doing but what some other key indices are doing.  Hard and soft commodities have run very hard are vertical on weekly and monthly charts and in unsustainable positions.  Yes they can go higher in the short term but this vertical nature is a bubble in the making.  The biggest problem with bubbles and vertical exhaustions is that you know it will end in tears but if you’re not on the train while it's steaming ahead you miss out on some of the biggest part of the moves.
On a similar note:
Don't be fooled by so called market professionals who are calling the resource sector in this country as the 'new economy'.  Such comments are fool hardy are you just need to remember back to when this term was last used, early 2000 at the top of the tech boom, need I say any more.  Don't forget that the name of the game, being a successfully listed company revolves around making profits and increasing earnings per share.  Many stocks in this sector have never made a profit or are likely to, so don't lose sight of this.  Keep to the big boys who do and you'll avoid a tearful end.


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.

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