Morning Report Monday 18 January 2016
Good morning everyone and what an eventful time the markets have had since Friday!
Today is a slightly different style of report from usual because Market Matters has received a few questions from subscribers who are a bit confused about aspects of recent reports. So, this morning we look to address some of these points.
A classic equities’ bull market is made up of "5 phases" - 3 bullish advances and 2 corrective declines. - see chart 1.
Market matters still believe that the US share market ideally has the 5th and last phase of the bull market from the 2009 low still to complete.
Our simple fundamental opinion is we have had financial central bank stimulation into the markets since 2009 creating asset appreciation (largely in the search for yield) which is now coming close to completion. Hence, we have to be conscious that phase 5 may have failed in this instance because the average retracement after a 5 wave advance is well over 20%.
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