Markets the world over are showing amazing resilience. It is not so much that there is strong buying – oops I have missed the train and I must get on board – but rather there is just no selling pressure.
Existing shareholders are happy to hang on but also your financial adviser is saying yes, still money to be made, so buy buy buy. But you will sell but not yet as you know there is more upside. Greed? No. There are no sell signals at the moment
Let’s look at the charts – XAO:
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The 300 day chart suggests that there are several months left in the run and maybe more than 10% upside so that’s why you are hanging on.
The DOW has not so much upside:
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But there again the DOW is well into new territory:
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It is 1000 points past its old 2007 high. And we know that when markets go into blue skies unexplored territory that the sky becomes the limit – no limit – but also we know there will be tears at the end for some at least. But the party is on and ask no questions.
But we are likely to see in the coming year a retracement from the move up from mid 2011 – in the order of 50% – healthy:
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Likewise the XAO:
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A September retreat could be a healthy proposition so watch out. But if you look further out to 2015 we see a high of around 6800 for the XAO to match the 2007 high.
A double dip?
Maybe but who cares this party is on for the moment.
Tom Scollon
Enjoy the ride