The markets have had a good run over the last couple of weeks. A much needed breather is on the cards. I'm thinking a target area of 3300 to 3400 for the pullback - perhaps the US reporting season will be the catalyst, maybe it's the capital raisings that seem to be emerging in the US - in any event, the technicals ain't looking so good...
1) we have reached resistance in the index and in many leading stocks
2) momentum, volume and RSI have all been diverging into the tail of the rally
3) wave count suggests a pull-back into 'B' of '4' of the primary trend
.bmp)
Notwithstanding the big picture remains a downtrend (which we can expect to rejoin in the second half), next couple of months are signalling continued strength (look to strength in Chinese index, AUD, commodity complex and relative weakness in gold)...for the moment its buy the dips for a trading rally with a target around 4000 for the index.
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