The Australian share market has been struggling to hold early morning gains and this is an indicator that we are near some levelling off before the next move. Which direction is a matter of considerable conjecture. Many Australian optionable shares are showing some weakness – these are bellwether stocks and their softness could flow over to the overall market.
The annual pattern for the Australian market is a sideways trending or falling market from September through to mid December. The markets then tend to rise towards year end and continue to rise through to April. This is a mathematical average view and thus there will be departures from this norm.
Australian stocks are currently looking tired technically and so whether we see the “typical” year end mini rally is yet to be seen. One reason that may temper such a rally is the fact that the September/October pull back was very mild. We have not seen the markets follow the “typical “ pattern this year.
Volume is a critical factor to watch for all markets and no less for the equity markets. Volumes on the US bourses have been weak but on the Australian markets volume has been falling since September.
From my own investing perspective I am bullish about the long term prospects for equities, but that is not to say that we will not have a few surprises along the way. Surprises are sometimes nicely termed bubbles. And right now there are many bubbles to choose from - the property bubble, the indebtedness bubble, the China bubble and so on you go. Step up and choose one for yourself but please no sharp objects!
Enjoy the ride.