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Monday, 06 July 2020
Could be another tough week
I have posted 3 charts on the 52 week high page. If you want to look at them and read the detailed comments click the link below. If you do not want to look at charts and read all the script then the following is a summary.
Overall this is what I see, and bear in mind all we have is the present moment. The US and Australian markets are in a long term uptrend. I do not think we have entered a bear market, although this could happen. Volume and price support are in tact, particularly in the US. The Australian market has been hit harder because of our real or perceived over reliance on China.
During the week I went to a seminar on stock market cycles. Before this recent event I was of the view that we were in a late cycle bull market. Late cycle bull markets can have parabolic rises mixed with extreme sharp pullbacks. They then gather steam and march up again. This happened in 1998 when the market fell 18% mid year but then rallied 28% from the low to end the year in positive territory. The scare then was uncertainty about Russia's political and economic future, not dissimilar to the current China scare. If you want to read the historical article here is the link. Interesting to note the similar rhetoric about the world ending and a bear market.
It is too early to tell what will happen. Charts look supportive. More falls would not surprise me, but if they come charts are even more supportive. No one has mentioned yet that this drama may play into the hands of Trump, his reelection chances and provide an ace up the sleeve for trade deal talks.
All the best for the week, it may be another tough one.