The Aussie share market follows the direction of the US market. For example look at the chart below comparing the correlation between the two markets. What the US do, we do, or do they follow us? I doubt it.
The US market can move up and down more quickly but the correlation with our market is significant. From an analysis point of view we can safely look at our Australian XAO and with confidence know its going to give us a similar guide as the US market. Who is really in control, the Bulls or the Bears?
There is a strong probability that we are in a long term bull market, not a bear, as many believe. The recent correction may well have been "the correction we had to have" for the market to sell off it's overbought status and regroup before advancing once again.
I have said in previous newletters I believe the bull market really started in early 2013 when our XAO broke above the consolidation period after the GFC. It was also the same time the US SP500 made all time highs to spur it on to the rally (with bumps along the way) for the following 6 years. 2013 to 2018.
I do not subscribe to the statement by many that we have had a 9 year bull market. In 2012 and 2013 I was lecturing in every capital city in Australia and not once did I hear the claim we were in a bull market. Fear was the feeling in everyones heart and minds, not confidence to buy.
Coming back to the present moment in January 2019 we have a market with a long term uptrend in price accompanied by a long term uptrend in volume (as shown by the volume indicator above the price line). Uncertainity and fear is high, just like it was in 2013. So what do you do? In my opinion you have two choices. Stay out of the market and forget about it or if you choose to be in the market do what all good traders do.
Only buy stocks that are uptrending, risk an amount you are comfortable with and know your exit strategy. Keep it simple and don't complicate it.
Speaking of lectures I will be presenting at the Australian Technical Analysts Association in Sydney on Monday the 18th February. Click on the link below for details of what, when and where.
The most difficult thing about trading or investing is we don't know what's going to happen, this is what creates the fear. The majority of research, analysing, study, predicting and worry is because traders are attempting to quell the fear deep inside them. In my opinion the answer lies in learning to detach as much possible from the noise of the market, combined with a good risk management strategy.
If you come to the lecture on the 18th Feb please come and say hello.
A Zen student asked the master "what happens after death?"
"I dont know" came the reply. The astonished student exclaimed "but are you not a Zen Master?"