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When I see investors buying into the current market I ask myself, who is doing this buying? Why? Do they know something that I don’t?
Of course there are some Instos that have to be fully invested. No choice – it’s part of their charter. They have to go out and buy in a falling market. Poor sods. Imagine your super being managed by some Insto bound by such rules?
But it is not just the Instos buying. Lots of private investors are as well. I see them on the screen day in, day out. But if we look at raw volume we can see that it is low and OBV is asleep. As I write I see the DOW has had three consecutive up days – whoopee – but on declining volume. Maybe someone’s confidence is building.
But no matter what chart I look at for the XAO, INDU, BHP and a list too long to recite – I see another low for the markets. The only question is how low and when it will happen.
Take a look at a 60 day Elliot in the first chart and a 300 day (default) in the second:
click chart for more detail
click chart for more detail
They both suggest a new low of between 10400 and 11200, so there is not much argument there. The 60 day suggests we may see this low around the end of this month or early March. The second chart indicates this is more likely to be around June.
If it is the latter then maybe there is time for a short party and maybe those players are dancing close to the exits.
When I can pull up a chart on a 60 day, 90 day, right through to a 300 day and see the same story, it is generally a good bet. We know markets are dynamic and constantly changing and the above analysis could change. I could be wrong about another low.
Oh yeah? This is just about when.
Enjoy the ride
Tom Scollon
Chief Analyst
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