Monthly Archives: December 2015
The Australian market (with others) takes its lead from the Dow Jones Index so it is important to understand the trend of the Dow Jones Index. It is worth considering the Dow theory which after 100 years remains a valid and logical interpretation of market action in the United States. From Dow theory, the Dow Jones Transportation Average (the Transports) plays an important role because the theory is that the Transports should always lead and confirm the Dow Jones Index. So what is the situation with the Transports?
The daily chart below shows how the Dow Transports Index (blue) has diverged from the Dow Jones Industrial Index (red) over the past three months. The Transports have continued to fall at a faster rate and diverge from the Dow Jones Index during this period. So according to Dow theory, the Dow Jones Index should be expected to follow the Transports and… Continue reading
The ASX200 is clearly in a down trend with yesterday’s price action breaching the 5000 level which is very important support based on the 50% retracement of the 2008 bear market. While there is some support around the 4600 level the next support is now at around 4000.
This ASX200 chart below, is clearly bearish and is not an environment that would attract an investor to buy stocks regardless of how attractive they appear. BHP for example is very much discounted. But it could continue to fall lower despite the fact that many of the big funds ostensibly are showing in interest in it.
This market could well go lower and it is difficult to contemplate a bull market in a world where growth continues to slow. There is of course a case to be made for accumulating the dividend payers such as Telstra and the banks. But an… Continue reading