The Big Boys, page-230

Hi Pisces, I’ve lost you a bit with my bearish outlook on the charts above. Intuitively I sort of agree with you that it still feels like the bull market has a lot further to run. The bear case is me just being honest with myself about how the chart pattern is forming.

But you know we both could be a bit right. Due to the narrow make-up of our main index, it might just need the Banks, Telstra, BHP, WOW and a couple of others to fall away (or continue to) for my graphs to somewhat play out, whilst a lot of the industrial and mid/small caps can still do ok.

My post on 18/9/15 above discussed a view that Telstra is heading into a Wave 2 down. I’m also expecting the housing boom to come right off and the Bank stocks could easily head into decline for the medium term and money shift to other sectors.

Even the whole dividend chase and asset inflation due to central banking pumping since 2009 is potentially turning with the US Fed looking now to slowly turn up the cycle of interest rates and withdrawing liquidity. Possibly starting this month. Arguably we are on the cusp of a new phase of the market for the next 5 years with a slowly rising interest rate environment versus the last 6 years. We might be surprised at how much certain sectors and dividend stocks have really been pumped up

Anyway, just noting there may be more disconnect between individual stock performance and our narrow index for the next while, with plenty of good stock picking opportunities even if the decline in my chart above eventuates.

Anyway I'm grappling myself with trying to reconcile chart patterns with a more fundamental view, but I've put a position out there now, so will be interesting.