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More Euro fears

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by Peter Switzer

With Wall Street still wary of the Euro debt problems, the question becomes — is this a reason to get out of shares or is it another buying opportunity?

If you look at the economics of the US economy, the Asian economies and our own, you would have to remain a believer in the bull rally. If you focus on Europe, its debt problems and the EU’s inability to create a convincing solution, you have to be worried.

Cautiously positive

US newsletter guy, Dennis Gartman takes a more technical approach to what’s going on now and remains cautiously positive.

"So long then as this moving average is moving 'from the lower left to the upper right,' and so long as the price itself remains above that moving average, we still have to call this a correction in a bull market and look to buy weakness rather than sell strength," CNBC reported he argues.

"In that light, the sideline really does look all the more inviting," he added. "We are long-term bulls; but we are uninvested bulls at the moment, preferring safer harbours."

A Buffett fan would remember his maxims that when everyone is fearsome, he is greedy. Also if you’re a long-term bull and you want to hold companies that have been too dear a few weeks ago, it might be time to think about collecting those companies.

Buying opportunity?

Clearly we’re dealing with uncertainties now but if you’re certain that you want to hold great quality companies such as BHP, Rio and the banks, this could be another buying opportunity.

For example, Macarthur Coal went into the $12 something region yesterday but it didn’t last, with investors knowing that $16 was on the table from Peabody before the super resource tax was put on the table.

Headwinds

Right around the world governments are creating headwinds for the stock market. The Europeans have to get tough to attract debt support. The Yanks are trying to reform financial institutions and the sell-off over there started with the Goldman Sachs crackdown.

And, of course, here the resource tax started us off in company with the Greek debt tragedy. I remain cautiously positive but I hate relying on politicians to come up with the right response to help stock markets!

For advice you can trust, contact Switzer Financial Services.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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Published on: Thursday, May 06, 2010