Now comes the tough bit
by Peter Switzer
Wall Street’s failure to go on with the positive job overnight could be seen as a disappointment but it could be the calm before the storm. Or maybe I should call it the friendly wind that blows up a few buying opportunities.
Running my eyes over the banks and their current share prices and then some of the big miners, it’s a great time to dollar cost average to bring down the average cost of many of your shares bought recently at higher prices.
The end of the correction will rest on poor leaders of Europe winning over the nervous investors and the professionals who believe the trend is your friend until it bends. Only change to investor confidence, which currently has been beaten up, will create the much-needed bend in the trend.
Overnight, the Dow lost around 69 points or 0.69 per cent to finish at 9,974.45, after rallying for much of the day. The S&P 500 lost 6.08 points or 0.57 per cent to 1067.95.
What really annoys me is that any out-of-line comment can spook the market. Last night, a Chinese official in Paris made negative comments about the euro which made US investors analyse that the euro-bonds would be avoided by the Chinese. And that did not go down well but it’s only speculation.
I don’t think China will do anything to destabilise its most important trading partner but tell that to a guy who makes money jumping on a sell-off trend!
We’re in the hands of the hedge funds and short-sellers but their time in the ascendency could be running out.
Resource tax rethink?
Locally, our fearless leaders in Canberra are coming to their senses and are now talking about changes to their resource tax. That’s a step in the right direction.
Remember, poor leadership got us here and only better leadership can repair the damage.
On the economic front there was good home sales data in the US and even better than expected forecasts for Europe as well. So the economics is good while the politics has been bad, which is my point.
Economic data both here — capital expenditure figures out today — and in the US with the update on Q1 GDP, corporate profits, personal income and spending data, the Chicago PMI figure and another consumer sentiment readings could help create the “bend in the trend” I am hoping for. But it will need a little bit of help, no, a lot of help from underperforming politicians, who are supposed to be leaders.
This has proven the tough bit that our leaders have found difficult to deliver on.
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Published on: Thursday, May 27, 2010blog comments powered by Disqus