Market Murmurs

by Gary Glover 26 March 2012

If my timing is correct this could be the week that sees the major support of the $34 region broken.  It has been consolidating just above the previous swing low of $34.05. 

With recent Chinese data showing the Chinese economy is starting to slow up and representatives for BHP and RIO both commenting in the last week that they feel demand is flattening for alot of commodities the sector could remain under pressure.  Has the market already priced this in or has it had its blinkers on thinking the resources boom can continue on?

I think only in the last month that market strategists have begun to question this possibility, mainly on the back of improved US data which has bullish implications long term for the US dollar and US bond yields.  Commodities don't normally run hand in hand with the $US dollar.  
For BHP, normally if we bounce of a low we are going to break, an attempted rally for no more than two weeks can occur before eventually breaking it.  Some sort of shakedown is possible too, where you see a sharp rally fail and break back hard.  We haven't had this but we have and the attempted non bounce for two weeks off the low.  It could be time. 
Computershare and QBE Insurance are two companies that will benefit greatly fundamentally from a bullish move in US bond yields and I believe the sharp move up in recent weeks for these stocks illustrates that thinking.   No need to chase these in this sort of sideways market but I would be looking to add these to any portfolios on any reasonable pullback.

Disclaimer

Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
 

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