Struggling to find a reason to buy

Struggling to find a reason to buy

One would have hoped that the selling might have dried up during my extended period abroad, but alas that has not been the case. The recent heavy falls in the market are reminiscent of the heavy correction we saw at the end of January this year. The markets recovered quite well after that rout, but it is too early to say that this correction is over, or whether it is something more serious.

The three indices that we chart, the All Ords, the Metals and Mining and the Energy Indices, have all rallied strongly, stopping at the resistance line of steep downtrends. A chartist will tell you that the most likely move early next week is another downward plunge, with the rally last week just being that - a recovery within a downtrend. Looking at the Sentiment Oscillator for the first time in six weeks, it is still below support levels. There is no buy signal here.

With respect to the junior mining sector, the real problem is the lack of buying. No-one wants to play. That means that routine selling in the market place is not being matched by routine buying. The sellers have to hit the bid and this makes people even more depressed. Having said that though, there is a small number of stocks that seem to want to go higher. Bellevue Gold and Breakers Resources are examples, both having made recent gold discoveries.