Morning Report Wednesday 27 January 2016
World markets volatility continues over Australia Day
Good morning everyone and trust you all had a great Australia Day!Overview
While we were enjoying Australia Day the Dow fell over 200 points on Monday night only to rally over 280 points last night, plus for good measure China melted over 6% on its start to the week. This is clearly a market where if you get too close, and hold on too tight, the likely conclusion is poor results and shattered nerves!
Market Matters short term view remains that the Dow Jones should continue this current volatile correction for another 2-3% over the next week before showing its hand at medium term - see chart below.
Emerging MarketsThe Emerging Markets Index and hence resources, remains far more interesting for the active investor in 2016.Market Matters believes that the Emerging Markets which are currently valued around panic GFC levels have reached ,or are close to a bottom - see chart below.We are looking to be a buyer of pullbacks with good risk/reward in resources during 2016 - therefore our current exposure to BHP, RIO and FMG.Remember this is the first time Market Matters has considering investing (not trading) in resources since our inception but we will continue to only consider the low cost producers in this tough environment.Emerging Markets weekly chart
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