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The views expressed in this report are those of Lesley Beath and may differ from Morningstar's views.

Reviewed this week

A selection from the Retail sector.

• Overview
  Pick your poison. More...
• JB Hi-Fi (JBH)
  Improving. More...
• Billabong International (BBG)
  Long-term support. More...
• Reject Shop (TRS)
  A monthly 'key reversal'. More...
• Pacific Brands (PBG)
  A final spike lower? More...
• David Jones (DJS)
  Catch a falling star? Not yet. More...
• Harvey Norman (HVN)
  Too early to bottom-fish. More...

Please note: before making an investment decision, Morningstar recommends you read the fundamental research available on these stocks.

Disclaimer: To the extent that any content in this report constitutes advice, it is general advice that has been prepared by Lesley Beath without taking into account the particular investment objectives, financial situation and particular needs of any individual investors. If necessary, you should consult with a licensed investment adviser or dealer in securities such as a stockbroker before making an investment decision. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.

Overview

Last week, the All Ords closed below its March lows; the ASX 200 is holding tentatively above them. The ASX 100 Resources has broken below them, the Materials has not.

This divergence creates a mixed picture, but these breaks, or recognition, of support are likely to have limited impact on the market at this stage. There are too many other things going on and the situation with the March lows varies globally as well as domestically. By that I mean that there are some markets, such as the US and the UK which are showing a loss of downward momentum as they approach the support of the March lows, but others such as China, have recently broken to the downside.

And although support and resistance levels are important in Technical Analysis, there is much more to observe, and isolating individual support or resistance levels, particularly at potential turning points, can be misleading.

In the current situation there is a lot of focus on the support of the March lows, and in the US the additional support of the 200DMA. I outlined this support (1233-1252 on the S&P 500) last week and suggested that "with bearish sentiment, as recorded by the AAII (American Association of Individual Investors) at 47.7%, the highest level since late August 2010, there could be some short-term stability. But at this stage, I don't believe that the correction in the US has run its course. If there is a short-term bounce, it could be followed by weakness in another month or so". The reasoning behind that view was the action in the US T-Bond/S&P 500 ratio, and the seasonal factors amongst other things. There is no change to that outlook.

But there is one important support level to monitor this week, which will have implications for global markets; and that is on the CRB index. And although I have just spoken about support levels giving mixed signals in recent times, the support on the CRB warrants comment.

I discussed the CRB last week, noting the "index appears vulnerable, reflecting the potential for a fall in the oil price". Well, the index fell by 3.6% last week, pulled lower by a 6.3% fall in oil. The decline in the latter pushed it to a four-month low, on the back of, according to Bloomberg, "doubts European efforts to resolve the Greek debt crisis will succeed, and on concern of reduced economic growth and fuel demand", and as "U.S. oil supplies rose to the highest level in 31 years for the month of May as refineries processed less crude amid a decline in gasoline demand, according to the American Petroleum Institute. Inventories increased for a fifth consecutive month to 367.6 million barrels, a record in data going back to 1980, the industry-funded group said today in a monthly report".