Those of you familiar with the game of ice hockey will understand what I mean when I write, “it’s time to check the goalposts”. A good netminder will, with his stick, periodically bang the goalposts behind him in an effort to make sure all the angles are covered. Well, the same theory applies to those seeking to invest successfully. The markets have experienced a nice run in the 1st half of September and it’s now time to check the proverbial goalposts.
The market equivalent for a piece of iron painted red to which I refer can best be described as the relationship between the carry trade (expressed by the AUD/JPY), the NYSE Composite and the credit markets. We used these three factors to check angles back in April with our successful ‘Stalking the Bear’ series. And then again in July with our correct ‘change in trend may be in the offing’ comment. So, without further delay let’s check the posts….
Post 1: Below you will see a weekly chart of the NYSE Composite. This is an update to the chart that first appeared on this blog in the post ‘Stock Market Strategy: Irresistible Force Meets Immovable Object’. Please note that the red ‘immovable object’ of a downtrend has been breached and the black ‘irresistible force’ of an uptrend remains intact. So, for the moment, intervention and liquidity creation trumps economic reality. Score one for the bullish camp and look for a continuation of the September strength…..
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