|
There are a number of reasons to be bullish Australian equities. A robust economic position, a (now) stable government and if the Australian dollar is any reflection, certainly a very desirable place to put one’s money. As always however, there are also a number of reasons to be wary of the current market rally.
Many investors point toward the flailing US economy with near zero interest rates, record levels of sovereign debt and very few places to turn should the world’s leading economy run into further financial turmoil. Others, may look on the brighter side and move farther afield than the US, where the economic picture is a whole different landscape altogether.
More specifically, we don’t need to look much further than our number one buyer of minerals, China. Keep an eye out for my column in next month’s Your Trading Edge magazine, where we will go into a little more depth as to why China will play a major part in the resilience of the Australian economy. Currently, readers would be aware that the All Ordinaries Index, like most indices, tracks US markets very closely. Is this a misrepresentation considering our seismic shift towards the demands of China? It may well be and we may eventually see global markets eventually tracking the Shanghai Index instead.
The point of all this is that Australia and indeed the world is becoming more and more reliant on growth economies such as those we see in Asia, and less reliant on the more established economies. To an extent I do agree with those who scream doom and gloom in regards to a global economic recovery, but one cannot just sit and wait for the eventual result as the opportunity cost may just be several hundred or even thousands of points gained on the All Ordinaries that unfortunately, when on the sidelines, traders will miss altogether.
A much better strategy is to focus on the now. Look to those stocks which will benefit from global demand today. Many of those stocks have been extremely profitable over the past few months and will continue to provide returns to traders and investors during the months or even years ahead.
A great way to do this is through the pre-computed scans in ProfitSource. The most successful traders remain committed to daily analysis of Elliott Wave and using the tools provided within ProfitSource. A great way to do this is to apply a top-down approach to a short-list of stocks which meet specific trading criteria and are generated through pre-computed scans.
What has been of interest is the number of material and industrial stocks which are returned as a result of ProfitSource pre-computed scans. Those stocks outperforming in today’s environment are the companies exposed to international demand. Demand for resources themselves and demand for the technology and equipment to deliver these resources to the end user.
When conducting your Elliott Wave analysis, be sure to take a quick look at the overall index before parting with your hard-earned trading dollars. As part of a top-down approach, Sector analysis can tell a trader a lot about the potential upside of the trade they are looking to take.
click to enlarge
As always, take time in your analysis and trade to a plan. It’s not all doom and gloom, the best trades may just be a little harder to find.
Happy Investing
Lachlan McPherson
|