Lachlan McPherson |
The market has been waiting for a number of issues to come to play before deciding on its next step forward.
The past few months have been good to us, providing bullish trades across a number of sectors, particularly those which we have discussed throughout this column in recent Trading Tutors Newsletters. To those who took advantage of this tremendous trading environment, I’m sure your portfolios, whether long-term or short have benefited from recent gains.
The main event global markets have been waiting for was the inevitable roll-out of stimulus measures as a result of early November’s FOMC meeting. A tremendous amount of capital has been waiting on the sidelines, anticipating a little further clarity on the US economic situation. Stimulus measures came out as expected, with the Fed announcing plans to inject US$600 into the US economy. Views on the fed’s latest move remain divided being particularly slandered by representatives out of Germany and China as a largely irresponsible move which will only create more problems in terms of US dollar weakness and a further disruption to the recovery for global economies. Others believe the move was integral to continue to spur growth in what is desperately clinging onto the title of the world’s largest economy.
What we do know, is those institutions which clearly have large amounts of investor money on the sidelines, will be desperate to provide returns to shareholders and we will likely see a continued increase of funds back into equities markets. After all, the ASX200 has gained nearly 12% since early July, and the Dow Jones Industrial Average has gained an impressive 17% over this same period. Those fund managers who have been hanging to the sidelines will be looking to make up their yearly targets and recover a portion of those missed opportunities whilst they were waiting for a more stable investment environment.
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So when is the time to buy? For a trader, timing is everything. For a long term investor, an initial downfall will result in very little difference years down the line. As expected, markets have sold off since US stimulus was announced. Stimulus was factored in, results came out as expected, yet there were no significant surprises to the market. As one road block is cleared, markets look to the next obstacle and unsurprisingly, European debt worries have once again begun to surface as a favourite topic of conversation. The European debt situation is no different to that of past months, although now the impending US stimulus can no longer be speculated upon, commentators seek a new constituent of fear to cloud the minds of investors. Regardless, opportunities remain. Current weakness is likely to prevail over the short term, yet the medium to longer term appears much more prosperous.
As a trader, one will be watching markets for clear signs of support using basic technical analysis taught in the Elliott Wave Webinar. This can be complimented by trend identification strategies, as well as entry signals in the form of EBOT, Oscillators and Moving Average signals. If you haven’t brushed up on your basic technical analysis, our free Elliott Wave Webinar may just hold the ticket to capturing the next move in Australian and US Markets.
Stay ahead of the game,
Lachlan McPherson
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