Actually, the market is doing what it will and there is no stopping it even though it may appear and actually be somewhat mad. Afterall it is the sum total of human behaviour and sentiment.
Last week we saw buying come back to the market – for all sorts of reasons. Perhaps mainly irrational.
What we saw during the week was an expression by many investors that the market is cheap enough now to start buying again. But this is a punt as I dare say that no-one really knows what lies ahead.
Let’s look at the XAO:
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All Ordinaries (XAO:ASX) Daily Line Chart
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Click to Enlarge
So, we see buying pushing the market up to a wave four correction. This is expected behaviour. Elliott suggests then a low of around 4000 and possibly even lower to 3400.
There are no guarantees and I do know from much experience that this may not even be a corrective wave four. That is the wave three may just continue down. I expect the market will eventually attempt wave four and then the market will collapse again.
This could be triggered by another or ongoing bad Corona news or even more global economic data that confirms the disaster future that lies ahead. I must say the world is a little blasé about the numbers right e.g., current unemployment/deficits/bankruptcies.
As I run through the top 300 stocks in Oz, they all look pretty sick.
My view is to sit this out a little longer
Enjoy the ride
Tom Scollon
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