I have just cycled through the top 200 – a reasonably safe list – but nothing excites. Over the years I have learned to bide my time, and I will.
Markets and stocks are fairly fully priced. Many will probably go higher but it is not a safe phase in the cycle, so caution is prudent.
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All Ordinaries (XAO:ASX): Monthly Line Chart
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It would be tough to argue strongly that a second wave five high will be reached. Could, but the probability is low.
Again, we have the two major sectors – Financials and Materials working against each other:
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S&P/ASX 200 Financials (XFJ:ASX): Weekly Line Chart
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S&P/ASX 200 Materials (XMJ:ASX) Weekly Line Chart
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Materials will most likely push higher and the Financials lower.
There is a long-term glimmer by way of the monthly Financials:
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S&P/ASX 200 Financials (XFJ:ASX) Monthly Line Chart
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But you can go on a long holiday once you have cleaned out your current portfolio before any major pullback.
As I cycle through the market, stocks fall into two major categories – those that struggle to their top and those that are yet to find a low.
A case in point is BSL. You could take a punt on it at this pullback:
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Bluescope Steel (BSL:ASX) Daily Line Chart
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But you could also be surprised by a sudden fall out:
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Bluescope Steel (BSL:ASX) Weekly Like Chart
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But if you are patient you could ride a much more likely lucrative longer move:
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Bluescope Steel (BSL:ASX) Weekly Like Chart
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Everyone else is waiting too, but few will time it with much success. That’s the markets for you.
Enjoy the ride
Tom Scollon
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