Morning Report Thursday 27 August 2015
The volatility in the markets continues to dominate headlines and investor uncertainty. Essentially markets were over extended on the upside so that as the ‘spring’ was stretched further so the reaction would be more volatile. This has been mentioned in our analysis of the VIX and its extended period of low volatility. In our view and consistent with our market themes, the extreme market gyrations experienced this week provide opportunity for investors and traders.
We have been investors in the banks for the past few days as they have entered are target buy zones and we continue to stand behind this view.
Oil stocks caught our eye yesterday with Santos and Woodside closing in positive territory while trading ex-dividend. We have studied troughs in stocks and oil prices over the last ten years, and 85 percent of the time, stocks bottom first, by an average of 26-28 calendar days.
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