AGY (ASX) Market correction?

Originally posted by wallstreet2 ↑

The US market has now pulled back 5% from its recent highs and the explanation given by analysts is that there was a sell off in Bonds with the US Long Term interest rate (10 year Bonds) going up 10 pips or so to 2.85% .
The US market had risen significantly over the last several months and commentators will use any excuse to justify a sell off and profit taking.
A 666point (2.84%) sell off in the Dow Jones Index was enough to make people nervous and hence the reaction here today. The US economy is still the world's biggest and is still regarded as the locomotive of the World economy.

However if we look at the facts and remove the emotion out of the equation we find that the US short term interest rate (Fed Funds cash rate) is still close to historical low levels at 1.50% and inflation is still sub 2%, unlike the short term rates that prevailed prior to Global Financial Crisis (GFC) of 5.25%+ and inflation rate of 4.1% .
Whilst the Long term Bond yields have risen recently the existing yield curve is still a Positive yield curve (that is short term rates are lower that long term rates) and this yield curve is conducive to economic growth.
Added to low short term rates (which is regarded as the lifeblood for stronger growth) the still low inflation rate and with the recent significant Tax cuts announced by President Trump (about the only good thing he has done !) , and plans for huge infrastructure spending, the US economy is in a sweet spot and over the next couple of years it will continue to grow strongly and could lead to boom times.
Given the above scenario US companies should continue to make record profits and that should translate into higher share prices across the board.

The Bonds may continue to be sold off in the next little while , with yields rising a bit more however the Stock market sell off may be shallow and short lived for the reasons stated above.

Most significant Stock Market sell offs , and recessions , are preceded by and Inverse yield curve (when short term interest rates are higher than long term Bond rates) and a higher inflation rate, than now.

Given that the market is expecting for the Fed Funds cash rate to be increased by 3 x .25% over the course of this year (all up .75%) to 2.25% and Bonds yields of around 3% or thereabouts the Yield Curve will remain positive and conducive to greater economic growth. Therefore it is fair to assume that the 5% fall in the Dow Jones so far, and potential for a further similar fall , is a correction only and not the beginning of a full blown Bear Market.

Overall assessment from some analysts is that this correction is a buying opportunity of select & sector stocks. I totally agree with this view and will be looking to top up on a few shares.
The Lithium growth story has a long way to go according to an article on Bloomberg on the weekend titled-
"The Breakneck Rise of China's Colossus of Electric Car Batteries" has solidified my faith in Lithium.

There will be corrections along the way as nothing goes up or down in a straight line but the trajectory of the Stock Markets is up, and I would not be at all surprised if the US Stock Dow Jones Index trades over 30000 sometime in the next couple of years.
This is not a prediction but purely a potential possibility , given the "sweet" spot the US economy appears to be in.
Naturally if this were to happen then other world markets would tend to follow.
Overall economic conditions now are not the same as those in 2007/8.

So lets not panic !

All In My Honest Opinion
Please Do Your Own Research.

Expand

ES futures elling off hard.

Next Support is at the daily 50% Long Extension at the 2506 anther 75 points from the current low of 2624. Look for a possible reaction at the 38% at 2594.
Great times ahead to pick up stocks at a cheaper price!

Trade safely.

https://www.screencast.com/t/LyBK92OKu8J

No.	Vol.	Price($)
2	59325	9.2¢

No.

Vol.

Price($)

59325

9.2¢

Price($)	Vol.	No.
9.4¢	73784	2

Price($)

Vol.

No.

9.4¢

73784

No.	Vol.	Price($)
2	59325	0.092
4	83943	0.091
12	1357853	0.090
6	427454	0.089
4	61918	0.088

No.

Vol.

Price($)

59325

0.092

83943

0.091

1357853

0.090

427454

0.089

61918

0.088

Price($)	Vol.	No.
0.094	73784	2
0.095	51130	1
0.098	10250	2
0.100	101200	2
0.105	589111	4

Price($)

Vol.

No.

0.094

73784

0.095

51130

0.098

10250

0.100

101200

0.105

589111

(20min delay)
Last 9.2¢		Change -0.001(1.08%)		Mkt cap ! $133.9M

Open	High	Low	Value	Volume
9.2¢	9.4¢	9.0¢	$329.9K	3.597M


Last 9.2¢		Change -0.001 ( 1.08 %)
Open	High	Low	Volume
9.1¢	9.4¢	9.0¢	1081942
Last updated 15.59pm 14/06/2024 ?

Market correction?, page-26

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