No place for heroics

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It seems as though each week that passes is another that feels like watching paint dry.

The Australian market, as measured by the All Ords, has spent the past four weeks in a tight trading range.

It pushed above resistance, on an intraday basis, on 11 May but failed to maintain the break. There was no sharp retreat. Instead, the index has since hovered around that resistance.

So, we continue to wait for some confirmation as to the direction of the next significant move.

The banks struggled last week and although they appear positive on a longer-term basis I do not think they are ready to push significantly higher in the near term. That will obviously impact the broader market.

The major resource stocks also look as though a long-term low has been registered, but like the banks, there are no strong signals in the short term.

Although the past few weeks have been lacklustre, the All Ords ended the month of May with a 2.5 per cent gain. The All Ords Accumulation added 3.1 per cent.

The majority of that strength was in the early part of the month.

Both the ASX 20 and 50 Leaders Accumulation indices edged 2.6 per cent higher.

The resource stocks ended the month lower. The Materials Accumulation Index lost 3 per cent, while the ASX 200 Resources Index dropped 5 per cent.

Sectoral performances were diverse as they have been for quite some time. The Diversified Financial Accumulation Index was the best performer, adding 12 per cent. Healthcare Accumulation posted a 9 per cent gain.

The month of May saw some successful breaks above significant resistance for some sectors.

I noted these as they occurred, but for the record, here are those breakouts: ASX Healthcare, ASX Utilities, ASX REITS, ASX Consumer Discretionary, ASX Midcap 50, ASX Transport and ASX Retailing. Those breakouts remain intact at this stage.

In the US, the major indices did nothing to clarify the outlook. As I said last week it is a mixed bag, with the key indices presenting different profiles.

When the situation is unclear, as it is now, there is really no place for heroics. The market will act when and how it wants. We cannot will it to do something when it is not ready to do so.

There is an interesting quote from a book that I was reading the other day. The title may sound a bit odd to some, but in this business it pays to keep an open mind.

In the book Zen in the Markets: Confessions of a Samurai Trader by Edward Allen Toppel, the author states: "Through a retraining of our conditioning and thought processes we can at last begin to see what the market is saying and not what we want it to say."

"We will be able to hear the market's signals and respond accordingly."

In Chapter 9, he talks about "the perfect master". This is part of what he has to say: "It is always right and never lies; tells you what to do, when to do it, when it changes its mind; and speaks lucidly in a language you can quickly understand."

"Listen to the master, and you will never be sorry. You will be rewarded greatly. You have to pay a price, however.

"The perfect master is the market itself. The market speaks to us in one language, price. Numbers, if you will. Numbers that you can recognise and differentiate.

"More than likely you have been listening to a different sound. That noise is your ego's voice. Stop listening and turn to the only expert worth following, the market.

"Don't make it difficult and obscure this simple truth. Forget your voice, and listen to the clear message and direct call given off by the market."