Australian Investment Blog

Should we be more nervous than in previous weeks? Good morning everyone and welcome to not only a new week but a new month! Shame about the Wallabies but I guess you have to admit the Kiwis were pretty impressive… Overview On the surface everything is following the previously predicted picture i.e. a strong rally into Christmas / January from the 4900 area - see chart 2. Remembering that Market Matters has been identifying for some time that from mid-November to January is seasonally a very strong period for Australian equities with the potential impetus coming from the RBA where they may cut interest rates on Melbourne Cup day! The market gave us a solid 467 point (9.5%) advance in a few weeks and has so far corrected 146 points (31%) of the advance, this all sounds normal and healthy. However, the concerns are around the internals and relative strength of the ASX's move e.g. The S&P500 has rallied 11.3% and only corrected 15 points (6.7%) of the advance - see chart 1. Most Australian investors are used to the recent relatively poor performance of the local market compared to the US but the question is if they correct a decent % of the October rally, how will the ASX200 fare? A number of investors are becoming increasingly concerned over the next 5 years for Australia even with a new Prime Minister; can Malcolm Turnbull turn us around like Steve Jobs did for Apple? For many Australians their confidence is being hit on a number of fronts, viz 1. the recent changes to our Banking regulations stemming from the Murray Inquiry;