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A sell-off week ahead?

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by Peter Switzer

After a great start to the year where the hi-tech Nasdaq index is up 17.76 per cent, you have to be scratching your head and asking, how long can this last?

My charts guy Lance Lai says his technical analysis shows a sell-off is overdue and this comes as both the Dow and the S&P 500 had negative weeks, though it was hardly wrist-cutting stuff.

The Dow ended 34.59 points or 0.27 per cent higher, but was down 1.15 per cent for the week and if negativity is in the air it certainly isn’t significant at this stage. The Nasdaq was up about 0.4 per cent for the week and it seems to me we’re in a holding pattern until some really bad or really good news comes along.

At the moment, good news is outweighing bad or even negative news but it has a positive side to it. For instance, new home sales in the USA dropped 1.6 per cent to 313,000 units on an annualised basis in February, while economists expected a 325,000-figure.

However, the median price of a new home rose 8.3 per cent to $233,700 and that’s the best result for nine months.

I think only a left-field event can turn an overdue sell-off, which I don’t think will be too dramatic, into another big correction this year.

This week the Yanks get pending home sales, consumer sentiment, durable goods, the important GDP number, as well as personal spending and income.

These numbers will improve our understanding of the US recovery while locally there isn’t much data-wise — new homes sales, job vacancies and credit figures.

I think the stock market faces a few headwinds in coming weeks but I’m not expecting any cyclones that could blow away our money!

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Monday, March 26, 2012

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