Editor: Just A St Paddy's Day Hangover?

After my last week’s call – or at least suggestion – that the Dow could fall to 9,500 and I watched the index climb in the early part of the week, although doubt had not quite set in but I did reel back and contemplate that it was a solid call. However, after St Paddy’s day in the US had passed and the hangover set in, nobody was buying in the States and the market fell and continued to slide for the rest of the week.

So just a hangover? No. A “dead cat bounce?” Yes! As markets change trend they can experience a short counter trend. The Dow medium term direction is down but in the course of the downward path it may rally – take another breath – hence the “dead cat bounce”. We may still see some up days but there will be more down days than up – it may be a market to short – the first for 12 months. But it may not last for months, maybe just weeks.

So what about the Aussie market, aren’t we buddies with Uncle Sam? You bet we are and soon we are going to retreat in sympathy, we always do. Forget the whys and wherefores and wars and the rest of it. Rarely does our market go it alone – we are coupled together.

The Bears are starting to appear. Once a bear always a bear – their glass is always half empty – they love winter, cloudy days and they bellow when they get their way. They will have some short term glory but this market has got legs to carry it further. But before we attempt a new peak we just have to acclimatise and that could take weeks. As I asked a couple of weeks ago what is the hurry? Be patient.

The press have been quoting analysts for some weeks as saying the market is fully valued and there are few opportunities. Why do they say that? Well they are not going to put in neon lights the latest code they are chasing - are they? Well we are going to tell you exactly what they are buying very shortly as we will be publishing a new bulletin which will tell all. Watch this space!

Enjoy the ride.

Tom Scollon
Editor