Peaks and valleys. Tue Jun 1

A few times a year we have these occasions when the markets are on hold as the US or most of the European markets are closed. Quite often the market will form a slow valley or slow peak over the two days which doesn't have an awful lot to do with what's going on outside the quiet period. For example, on a negligible lead the market might run up 1% and then retrace 1% the following day.
In this particular case, we've had more than a negligible lead because the US market fell around 1% on Friday but it was on low volume and possibly triggered by nervousness over the downgrading of Spanish bonds and furthermore, the Eurozone markets were unconcerned last night. Normally, it would be slightly surprising that we fell almost 1% by 11 am but it does reflect the nature of these days. I've done some buying here and there and the market has recovered a few points but I am a little concerned about buying too much because it's not out of the question that the retracement could be over.

2.02 The day was starting to pan out according to the template as it recovered from a low just before midday but another shake out has left us still down by 35 points or 0.8%. Despite my positive spin on Macquarie the market is less confident and they are down by 1.7% with the calls down to 69 cents. The other banks are weak too as the market waits for the RBA interest rate decision for May. Rates are widely expected to be kept on hold although it will be interesting to see if there's any hint that they could drop back in the months ahead now that Europe's woes have worsened and the Australian consumer seems to have hit a brick wall.

4.10 The RBA left rates unchanged and I saw no hints of a softening bias creeping in. Despite that, the market recovered somewhat into the end of the day. The Xjo closed down 16 points.