Dow v Xjo. Tue Aug 25

The Dow Jones Industrial Average made a new high last night and then reversed to close unchanged forming a slightly bearish doji bar in the context of a new high.

The S & P 500 index has the same shape.

Meanwhile, the Xjo index looks like this....

Valuations suggest that the Australian market is cheaper than the US and with the economy continuing to surprise with its strength there is good reason to think that our market can outperform the US.
Nevertheless, the story from the charts above is not encouraging in the short term. I'm hoping that most of my positions will be immune from falls in the market but so far today, with the Xjo index down 28 points, they've generally slipped in line with market direction. Awb is the worst as a couple of downgrades based on the cost of closure of their Brazilian operations has led to a 9 c drop to 137. My problem with this now is to determine whether yesterday's high was the completion of a bullish pattern or whether it was the first leg of a larger range move (which was what I have been thinking).

I suspect that unless it reverses back up sharply, the wisest move would be to sell out on a retracement rally. I'm hopeful it will retrace as it bounced off the earlier sell down to 132.

12.42 Sold out about half of my Awb at 136 (v 134.5) as it looked like the retracement was failing. It's having another go at the minor intraday resistance level of 138. Also out of half of my Lyc at 70 (v 49.5) as a big gap open was followed by a reversal. It's steadying now and is back at 72.

1.22 Out of the rest of Lyc at 70.5 as they get the dreaded speeding ticket ie the ASX asks them why their share price has run so fast. The general response is "no idea" and that normally puts a dampener on a rally.

2.34 Just bought Ipl at 330. I was watching it all morning and was tempted to pay 326/327 earlier but wanted to see more confirmation. It started to surge so I jumped in, it's now 334.

3.21 Out of the rest of Awb at 138.5 (v 134.5). The market has rallied back to even, outperforming most of the indices in our time zone.

3.38 Replaced the Awb with a few Australand, a property developer who have just had an equity issue. I'm chasing it slightly but the set up is pretty good - long at 51.

4.12 The market tailed off in the last hour, down 20 points. No major changes in any of my stocks although Ppx closed near its highs and looks good.