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04th June 2007 |
WHAT'S IN STORE FOR WORLD STOCK MARKETS?
Our last comments in March concentrated upon the possibility of
either a short term correction or a major turn downwards. We said that we would
remain positive if support levels were not broken and indeed this was the
result for most markets.
With informed buyers still selling into rises
our emphasis remains cautious with emphasis on trading rather than investing. A
disconcerting factor is that the feel of this market is similar to that of 2000
when world markets first wobbled and then crashed. One of Gann's timing periods
for major turning points is 7 years…we're there now.
However for
the shorter term our individual analysis of world markets disclose the UK, US,
Europe, South Africa, Thailand and South Korea still have a little way to go.
There are a few markets approaching support levels but apart from SRI
-Lanka there is still some way to fall. These markets are Venezuela, Malaysia,
Russia and Slovakia with New Zealand possibly on a break out.
The most
attractive markets after a little patience will be those which are now at their
tops. The analysis indicates that they could develop interesting buy
opportunities after corrections into July & August. There are no less than
18 world stock markets with I-shares lining up for big buying opportunities
ranging from Australia to Taiwan, subject as always to confirmed strength at
the decision levels.
We are still waiting for the usual last blast
upwards usually seen at important tops of markets.
Perhaps July could
be the catalyst up to the bear months of September and October. A major short
term opportunity could be in the offing.
THE DESPERATE BOND & GILT MARKETS
The UK Gilts
market is looking set for a large fall from its current level of 146 down to
138. US bonds are now on support but is attacking the support level for the 4th
time which usually goes through. This would mean a fall to 102 from 109. Bunds
have got further to fall and Japanese bonds are no where near a buy signal.
INTEREST RATES READY TO SURGE?
If we are to see Bond
markets fall then this would normally be associated with rising interest rates.
Looking at interest rates in the UK the minimum level anticipated at this time
would be 6.6%. This would obviously be a blow to the indebted house owners of
Britain and could be another catalyst for a stock market fall. It will be
essential to keep a close check on your bank. The more they are into mortgage
lending the more vulnerable they will be.
TODAYS SPECIAL SECTORS
Whilst our analysis is suggesting caution for many world
markets there are certain sectors that have the potential to outperform despite
the possible general demise of the markets.
We already have a heavy
weighting in energy with recent buys and a large number of shares lining up in
the Gold & Natural resource areas.
There could be some exceptional
profits here.
STERLING DEPOSIT ACCOUNTS
A number of currencies are
now lining up possibly presenting opportunities against the pound. The US
dollar is not such a currency where current action has just triggered a short
of US dollars against sterling.
COMMODITIES
We continue to concentrate
on Soft commodities with little result to date whilst a few metals have
presented limited opportunities. The CRB index has gone nowhere since the
commencement of our Hedge fund management in February but still remains an area
upon which we are hopeful of substantial future profits.
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