I had to look very hard at my charts of New York to find anything that might be considered slightly positive – all I could find was that despite the S&P ending the week on a very sour note, it still did not exceed the low set two day earlier. OK – not much but in such dreadful times, we do need to keep a bit of an open mind. As mentioned previously, I do think “they” will try to rally the markets into the end of the month/quarter. The only question at the moment is - from what level.
Looking at the S&P, it broke through the 2100 area in 2016. (Currently 2304) So I think there should be reasonable support between 2100 and 2200 – if it follows recent trading format – perhaps a mere couple of days away! The same with the Dow – it should find support between 17500 and 18000.
However, once more, I think the damage that has been done to the markets is so serious that I cannot see the bull market being brought back to life any time soon. Rallies yes, but from where I sit at the moment, that is how I would look at any improvements. As I have mentioned many times, the only period I can compare current trading to is 1929. And following on from queries I have received, my view that we could be facing similar times to what followed that market rout, is based on a number of similarities that were being seen in places such as the US leading up to the peak in January this year. There is no way at this stage, that I can categorically state that the outcome will be similar but perhaps it is an opportune time to think that if this is the correct analysis, perhaps people should be taking protective action. The good thing is that if I am wrong, yes, we will miss a bit but once we have confirmation that the game is on again, then it would be easy to get back on the train.
Looking at our indices, the XJO is already back into support from the 2016 low. Next support is around 4000 so pretty important to see us hold around current levels. Mind you the XFJ is already back in the upper level of support from the 2011 low. What is amazing though when updating some of my charts, stocks such as Woodside that had frustrated me so long with what I thought was a huge top pattern – just kept travelling sideways and then promptly halved. Took an annoyingly long time. Westpac as well. I had that chart up on my wall with “Do not forget this chart” in huge letters. That pattern took a long time to play out as well but it met the major target I have had for the past couple of years in almost a flash.
Keep an eye on the wheat price. It has found its feet in the past few days. Wheat is one of my economic indicators – perhaps it is improving on weather conditions but often it can be a harbinger of inflation. Remember the one thing we do need in this world is food – as well as toilet paper!!!
Later this week the packers arrive at our place to commence our move north. (Hopefully the borders won’t be closed in the next ten days). Then it will probably take me some time to get settled and my charts up to date. So not sure when I will be able post again so good luck while the markets try and find their initial low point but just keep one eye on the longer-term picture.
(20min delay)