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Correlation of market indices

Regular readers will know I have commented before on how the Aussie 500 has a strong performance correlation to the the US SP500. You can see in the  chart below that this has been the case.

However the last few months the US SP500 shot away without us, leaving many Aussie traders feeling quite frustrated.

The US market broke up back in May, it took us a few months to do the same, but when it caught up it happened very quickly.

With the recent panic about Argentina  (there is always something isn't there?) and the US markets in general being a little over bought, the market sold off. However our reaction has not been as savage, in fact the close correlation is returning with the two indices converging.

What else is happening?

Also for some time I have been saying that if we could get more "breadth" in our market it would make it stronger, encouraging the correlation with the US to continue...or perhaps even start to outperform it. What we need for that to happen is lagging sectors of our market to kick up. That appears to be happening.

 The top 300 resources index has been consolidating going sideways for a year and has had a recent move up.

 The Emerging Companies Index has broken up, it too going sideways for a year and now the first encouraging move up for 3 years.

Other sectors that have been driving this market like Finance, IT, Telephony, Discretionary spending, Property and Energy all remain strong, the Health sector being the only one to look a little tired, but it could be just taking a breather after a massive run. If the Emerging companies, smaller stocks and resources kick into this market along with the Gorillas of Finance, Health and Telephony, 6000 points isnt really that far away.

 With the recent market changes stated above "Peters Portfolio" has responded positively as seen in the chart below. For more details about what I am buying and selling go to the website by clicking here

http://www.easysharetradingsystems.com.au/peters-portfolio.html 

 Newcastle ATAA

A reminder I will be speaking at Newcastle ATAA this Saturday. The ATAA website has now been updated, for more info about that lecture click here

http://www.ataa.com.au/display-view/newcastle-saturday-11th-july-at-9-45am/newcastle-meeting.html

Courses

Also a reminder about the upcoming courses, Sydney is now 50% booked, if you would like more info click on the link below

http://www.easysharetradingsystems.com.au/Trading-Course/ 

Have a good week, regards Peter.

"there are risks and costs to a programme of action, but they are far less than the long range risks and cost of comfortable inaction"

John F Kennedy

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