If you like equities, you might want to take a look at the Dow Jones and various indices that correlate with it. The Dow Jones is hanging just above 12,000 pts. This is a support level, though it might be broken, so its worth waiting for news that would sustain a rally. The market might yet fall to 11,680 pts, its previous support. I am not all to gether negative on equities. There are several reasons for this:1. Some markets like Australia, Canada, South Africa have a considerable exposure to commodities, so it goes without saying that those markets will be positively impacted by the bouyancy of commodity prices.
2. Broader equities will be hurt by higher interest rates, but they will be bouyed by inflation and industry consolidation, ie. takeovers & mergers.
For this reason I see equities going sideways. Might the Dow and other indices slip to a lower rung of 'hell'? Possibly, but I dont see that happening without higher interest rates or the failure of a large financial institution. So at this point its worth looking for evidence of a turn around. A rally to 12,400 pts would be pretty convincing evidence at this point.
------------------------------------------------2. Broader equities will be hurt by higher interest rates, but they will be bouyed by inflation and industry consolidation, ie. takeovers & mergers.
For this reason I see equities going sideways. Might the Dow and other indices slip to a lower rung of 'hell'? Possibly, but I dont see that happening without higher interest rates or the failure of a large financial institution. So at this point its worth looking for evidence of a turn around. A rally to 12,400 pts would be pretty convincing evidence at this point.
Andrew Sheldon www.sheldonthinks.com
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