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June 21, 2007


The ASX Gorilla

Thursday's volume in the XMJ (materials sector) was the highest daily volume in that sector since February, and was accompanied by a strong close, albeit just short of a record close. My net assessment is still bullish.

Over the last week or so there certainly have been divergences between sectors. As I noted over on Reece's blog (http://aussiequanttrader.blogspot.com)

"its interesting to see that the materials sector made a new all-time-high on Friday, the energy sector closed at an all-time-high yet in contrast the financials were extremely weak and probably largely responsible for the main indexes (XAO/XJO) going soft in the earlier part of last week."

Of course the market is going to do what the market is going to do, as the adage goes...but I'm not inclinded to bet against the materials sector in this market over the medium to long term...with OXR I intend to catch a larger trend, as opposed to any shorter term swing.

Time will tell.


The ASX Gorilla

Its probably worth contending that the idea of a breakout succeeding without volume has to do with the Volume Spread Analysis (VSA) concept of 'force' ie. how much volume was required to move the market? A substantial move with low force can imply a drying up of liquidity on the side opposite that of the move.

Trembling Hand Trader

Hey ASX Gorilla
I have no real disagreement with you about OXR if you have been long the materials sector the last couple of months you have been dead right. My concern was that volume has been on the declining stocks and that is not great when looking at the overall market position as it concerns my trading i.e. the SPI. Just a note that large volume was due to expiry of the SPI and options, which is always the highest volume day for the quarter.

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