As mentioned in my notes on Monday, I am not preparing my Ramblings any more – but just a brief update here.
It is not uncommon in the Australian stock market for the industrials to trend in one direction and the miners in the other which is why I have been able to accept this situation for so long. However, the difference at the moment is bordering on farcical. Five up days in the NAB – five down days in BHP. Where do all the optimists on our banks think the banks are going to get earnings from to pay these big fat dividends if it isn’t to a large degree dependant on the outlook for our miners and the associated companies. But I admit there have been no breaks of the uptrends on our major banks and obviously no sign at the moment of the miners breaking their downtrends so as a chartist it is dangerous to assume that a change of investor sentiment is imminent.
In the background – we have the US just hanging in there as is London but Germany looks to have already broken an important line in the sand. We are now right in the period where I was looking for increased volatility extending out to the end of May/first week of June. Increased volatility increases the probabilities that the line of least resistance is down.
