These charts are starting to give me nightmares. Wall Street, as is the norm, exceeded that previous peak and is now retracing. Our markets have not duplicated this and are also retracing now. I am watching for a break of both bottom wedge lines.
The wedge shaped patterns and the failure to get back up to the top of the wedge lines on the last move up is also a sign of weakness IMO.
Volumes are increasing on the declines.
I have been watching these charts for some weeks. Last week, interrupted by ANZAC day holiday gave me some time to ponder things. Long and the short is I sold 50% of my positions, most of which were in profit. I held on to the companies where I'm prepared to ride it out and I like the story. Many of those are in the health sector, because I think that's a sector that's going to retain its huge following just now, whether from a vaccine perspective, cancer therapy perspective or an IT perspective.
I'm a glass half empty personality, and acknowledge this has led to some bad decisions trading or investing wise in the past. One of the more important things to understand when dabbling in the markets is to know yourself. As many of us are aware the markets are about psychology - the % of which you can argue about but I believe its over 50%. But in the wider macro picture I can't help think the following must at some stage have a larger and direct market impact, though it is more and more difficult to read between the lines in the majority of the dreadful media and journalism we have these days which is always slanted for a purpose.
Main issues I see that may lead to a correction of some magnitude:-
Ending of Government support in Australian in coming weeks. Governments can't keep bailing the population out.
Geopolitical tensions. China is ramping up the foreign policy perspective to try and unite its populace when things are actually not that great on the ground. Its picked Australia as its punching bag and that will, and is having some fallout. But that's not China's main aim here. There are flexing their muscles to see when the west will actually take some action. I don't believe that is far away. History is repeating the late 1930's.
New strains of COVID are starting to raise some concerns in some sectors of the medical fraternity. I don't believe we are anywhere near the end of the COVID story.
A slower than expected roll out of a vaccines, that are not 100% effective in any event.
COVID Breakouts in China to slow its economy again.
The disarray/polarization of American/British/Western and European society, and a growing intolerance to lockdowns.
The effects of the change in climate on populations and the resulting mass migration of populations. ( regardless of whether you believe that is caused by man or otherwise, it is happening and we have to adapt to it. Regardless of what is causing it, we can't reverse it IMO.)
So this leads to a look at BBOZ and BBUS which are of course showing signs of bottoming as the indices show signs of topping out and look similar, as you'd expect
I will be steering clear of entries into many specs for the next few weeks. There are a couple of very juicy prospects, but on the whole I think its safer to be out of the market than in it at the moment.
I just can't see how markets can go much higher given they have been fueled by cheap money, gamblers and speculators, so lets see what happens. I'm ready to enter BBOZ and BBUS if triggers are met.
I've also had this discussion with some folks who are seriously wealthy and they have all been cashing out for months on their more speculative positions. This minnow is moving to the safety of calmer waters.
