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Markets continue to defy gravity. What is real value and what is desperate money chasing a home is the vital matter. With interest rates at an all time low - zero in most western economies - and the world flush with funds it is hard to find a home to park your funds. So equities are the focus.
Where and when will this rush to equities end?
There are no clear signs and whilst I have been cynical about this run up I am reluctant to change my call, as this is the stuff that creates bubbles. And when bubbles burst rationality goes out the window and everything gets smashed.
But lets look at what the charts say:
INDU:
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The Dow is due for a correction and has been for some time - but who knows when?
On a weekly basis it is due for a bigger correction:
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And an even greater one on a monthly chart:
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But two years away!
Closer to home, the weekly All Ords looks like this:
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And the monthly:
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So it appears that the bias is to the upside - but on a long-term basis it is not a strong trend.
Lets look at some sector indices - on a weekly chart, which in balance is the more useful:
Financial:
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Still more upside!
Resources:
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Maybe downside.
Industrials - more of the same - range trading:
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Consumer staples - more upside:
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And maybe also for Discretionary:
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And likewise Health Care:
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So the charts say that over the next couple of years generally upside.
We accept that for the minute
Enjoy the ride
Tom Scollon |