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I am very conscious that my topics of late have focused on three main areas: World outlook for equities, sector indices (in particular Australian and resources) and financials. These are the three important areas of interest for Australian investors.
Forty per cent of our All Ordinaries is made up of Financials, a wide variety of businesses but fundamentally the big four banks. Banks are crucial to many Australians for their retirement and over the last four years their retirement plans have received a set-back. Many will live a basic life in retirement as opposed to a very comfortable one pre GFC. In dream time.
However, if it is any consolation the good times will come again. It will be the Mother of all Booms and maybe the Mother of all Bubbles and therefore the Mother of all Crashes. But there will be time to get in and get out with a great return.
So retain your hope and don’t throw away your hard-earned knowledge and skills about the markets.
So to some charts:
NASDAQ Banking:
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DOW Jones Banking:
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XAO Financial Index:
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ANZ:
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CBA:
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NAB:
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WBC:
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As you can see, there is a variety of observable patterns. Even though some show a side range trading pattern, the ‘take away’ is that there is no upward trend emerging. Could you take a punt that this could be the low and that all the bad news is out?
That is exactly what it would be - a punt. A bet. And that is not the way to trade or invest. If you are trading this relief rally – the wave four in other words - then you need to be careful with timing and know when to get out.
So there is no good news for banks at the moment and when you consider the woeful data regarding overseas banks that is ‘creeping’ out, banks and customers and investors all over the world and here in Australia should be alarmed.
Enjoy the ride
Tom Scollon
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