Monthly Archives: June 2015
There is a lot of market volatility at the moment due mainly to the Greek debt situation. It is intriguing how a small country with a population of about 11 million can affect the world economy. Greece is a country where early retirement is accepted despite an apparent lack of work ethic, where the payment of taxes seems to be optional and successive governments are in a fantasy world where debts do not have to be repaid. But of course the big issue is the future of the European Union and the Euro. If Greece can default on its debts, why should other countries repay their debts?
Despite the Greek situation, American markets remain bullish and with the VIX remaining at low levels and showing little volatility all indications are that the bull market should continue – at least in the United States. This is significant because the United States… Continue reading
Despite a weak Australian equity market most commentators remain very positive for a continuing bull market. But is this justified? Buoyant markets and world recovery is really dependent on the US economy and despite a weak first quarter, most of the economic news coming out of the USA is positive – but elsewhere there is uncertainty. The fall in oil and other commodity prices has been very positive for consuming nations. It is equivalent to a tax cut because it supports consumer demand. As a result, fears of continuing deflation problems in Europe have eased with both headline and core inflation now positive.
The bank of Japan has created uncertainty with its massive quantitative easing program which has stimulated the Japanese economy (although GDP growth and inflation growth remain very weak). The very much weakened Yen (at about 126 to the USD), has had the effect of exporting deflation… Continue reading
Most commentators remain bullish on shares and the corrective moves in the Australian market over the past few weeks are offering good quality stocks which have fallen in price by some 10% over the past month and look like bargains, but are they?
The question is whether this is the time to buy these “bargains”? In a market which is undergoing a correction, fundamentals provide no indication of when to buy, they simply show the investor which stocks are quality businesses. On the other hand technical analysis provides the tool to time the entry to these stocks and at this time technical analysis suggests that this market remains uncertain and it is too early to buy.
With stocks, a general approach is to buy only when the market is rising, as indicated for example, by the weekly close of the ASX200 above the 30 period moving average (eMA). This approach… Continue reading