For the second time in the space of a month the FTSE 250 has cracked below its 20-day moving average. The last time this occurred was early summer; then the index went on to spend a few weeks below this moving average, making a new lower low, before resuming the trend higher.


A similar event here should see a test of the 902.50 low -which was both an August reaction high and the early October reaction low - with the potential to drift down to 867 if a more protracted decline kicked in. Intermediate trends in the market tend to run between 3 weeks and 3 months with the current end-of-year a handy time scale for a flat/downward phase.

A more serious decline (one lasting months) would require confirmation of a top with a test of October's highs. This test could only emerge after a break of the prior March-October trend, with a sideways market shifting the focus from one of accumulation to one of distribution an important precursor to this test.

Market tops rarely shape the sharp reactions of market bottoms because people tend to be more reluctant to sell (even when holding a loss) than buy.

So setting a Zignals Stock Alert for XMCX at 902.50 and 867 will give heed as to possible trade opportunities with another at October highs to mark a resumption of the trend.