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30/08/15
09:38
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Originally posted by Orwell
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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.
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Yes Orwell . If ever there was a market destined to confuse and throw up conflicting signals both technically and fundamentally this is it . The scenario depicted on your chart is actually what we want to see for an extended period where stock pickers get great opportunities . If it started going up again right about now I think I'd just about be ready to get into ditch mode , a little more pain is warranted.
Obviously any hesitancy in our property market is going to affect the banks which had been priced for a never ending housing boom