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It seems you don’t care about the markets at the moment. You are either still on holiday or pretending a new year hasn’t started. Perhaps you are trying to erase the last four years from your memory. Or you are just being really cautious.
I can pick your absence by OBV (On Balance Volume) but you should not turn your back on the market entirely. That can be dangerous.
Let’s have a closer look at OBV trends, starting with the XAO:
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Volume has headed south as the market has shown a slight positive bias over the last few trading days. This is a negative as significant selling would send the market down the chute, although this seems unlikely. We would expect volume to pick up in the next couple of weeks as more investors return from the holiday break but I can’t imagine this will push the market higher. There are no compelling positive signals.
The Finance sector volume has been on the slide for the last two years:
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And so too Energy:
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The Consumer Discretionary sector has only been sliding for the last few months:
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Health Care OBV has held up very well:
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And so too has the Industrials:
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Consumer Staples OBV has also held steady, perhaps because as we eat and drink more when we get stressed about the economic outlook and share markets:
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Telecommunications volume has picked up sharply:
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This could be because investors are thinking that Telstra (which makes up most of this sector) is not too bad after all or they are hoping it can head higher before they bail out. More the latter I think, as Telstra could have a purple patch for a little while.
Materials have also held up:
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Investors don’t want to jettison their favourites like BHP and RIO as they just bought them in the last year or so.
Utilities never really lost momentum:
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Investors in India are also AWOL:
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But in the US and UK there is a little more interest:
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I prefer the cautious Australian and Indian attitudes to the optimistic views of the U.S. and U.K.
I will be watching very closely what your moves and mood will be as you return from your summer break. I suspect you will do nothing. Much the same as the ‘wait and see’ approach you have maintained for the last few months.
But beware of turning your back.
Enjoy the ride
Tom Scollon
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