Market Focus March 13, 2013. ?A Time to take some profit off the table.

By Kenneth Robson on March 13, 2013 • ( 1 )

To buy or to sell? That is the question.

Most trading days do not alter the prevailing market sentiment. Although this may be bullish, bearish or neutral, there is a daily variation as participants oscillate between optimism and pessimism according to winds of economic change from day-to-day. Mostly these minor oscillations of the market do not matter. At other times the turn of the market during the trading day can trigger a new corrective or impulsive move of the market .

An obviously fallible technique for gauging market sentiment is to assume that other reasonably informed participants will have similar emotions and make similar decisions to one’s own.

Despite the odd passage of negativity, investors have benefited from a stellar rise in the stock-market; something like 10% rise in the new year, and of the order of 20% since November. Those participants who haven’t already been selling into the market strength of late will be looking somewhat nervously at bouts of selling which might quickly erode their paper profits.

Although there may not have been any alarming economic event, an increase in profit taking selling may be the catalyst for more selling, prompting still others to sell to stop further loss.

Trading today has reversed the strong gains by the big-four banks that has underpinned the Aussie market this year. Tomorrow the losses may be reversed; but today’s falls are a warning to safeguard accumulated profits, and look perhaps for alternative investment options. In a rising market it is often the blue chip stocks that move initially. Small-cap stocks often follow after this, but tend to be first affected in a retracement..

TA observations

Because of the strong bullish overall sentiment one would expect that any correction would be short-lived.

Support can be expected at 5000 and at 4880.

The 38.2% Fibonacci retracement level is at 4850.