|
Tom Scollon
Chief Editor
Last week we spoke of the likelihood of a market 'blow off' – higher high lower volume – and we got it last Thursday.
Fear has arrived. But no need for panic.
We now read of higher inflation because of oil and of course, oil is heading down. Well, for a short while. We also hear of further rises in interest rates beyond Fed Chairman Greenspan's 11 th inning. We hear of falls in consumer confidence and therefore spending.
All these are apparent rational and 'fundamental' explanations, but the reality is that markets do act in predictable ways. The markets have to pull back before they move forward.
After such a buying spree, late comers realise they have bought up the risk curve and attempt to back out at a time when the Fundies are lightening their load. The consequence is panic as more people head for the exit signs than can fit through the door. Fear sets in and panic behaviour becomes evident.
But it does not last forever. At least in our local market. We are looking at a pullback to maybe 4300 and then maybe some range trading and then up we go again to maybe pass 5000. So there is still money to be made in this market if you are holding the right stock.
We welcome yet another columnist - Mario La Marra. Mario is a previous Safety in the Market student and is an experienced trader and PS146 accredited. Welcome Mario.
Enjoy the ride
Tom Scollon
Chief Editor
|