Thursday 16 August 2018

August always a bit of a worry...

FTSE weekly chart, RST pattern

As long time readers of this blog will know, August is always troubling in the markets. Everyone is away but events go onward in the meantime. In 2007 the weeks leading up to September were very rocky and a prelude to the deluge.

With Trump pushing the US economy on, high employment, low inflation and UK government debt under control, it does not at a macro level feel like things are set for a tough autumn...but there are a few signs:

As above, the FTSE looks like it is making lower highs and that could see a big drop over the autumn IF the trading patterns stick. Interesting too to see Copper falling very rapidly, in world where we need copper for everything and mining it is getting harder, not easier, it remains a leading indicator of trouble ahead.

One reason the US is currently doing well too is the big shitty stick Trump has been using in world trade. This, for example Turkey this week, is causing a flight of capital from Emerging markets including Iran and Russia (really bad there, rouble well off).

For the UK, the other week I posted on how record personal debt has been accrued and how sensitive people will be to interest rate rises - but also, given where the debt is levered against, house prices and share prices.

So many contra-indicators make for a situation that must be impossible to call, except to say I don't think I will be pouring more savings into the FTSE much before the pre-Xmas rush.


Thud said...

I'm sticking with U.S. at the moment,record earings and large div increases....oh and no Corby!

Steven_L said...

My SIPP is split 20 ways - 8 equities, 8 funds and 4 trusts with a big overseas bias. I keep saying I want to buy studs to hang onto for 20 or 25 years and then people keep posting scary charts and provoking me to sell / flip everything and waste money on fees.

I can see plenty of fairly risky stuff I want to invest in over 20 years - India, Vietnam, Sony, IP Group.

I can see a bit of stuff I think might pay off well over 5 years - Oil & Gas companies like Enquest, Hurricane Energy etc.

When it comes to finding 'cheap' shares that's becoming a lot harder. I think Inland Homes is cheap, I think Standard Chartered is cheap, I think Tate & Lyle is cheap I think a lot of trusts that hold things it's hard to buy (like Indian and Japanese equities) with their 15% discounts are cheap.

Momentum is still the winning trade, which I'm useless at and is why I don't even look what is in the 8 funds.

I'm not planning on selling, then again something might change my mind, but not CU's scary chart.

Anonymous said...

What's the thinking on UK equities post-Brexit under the different scenarios. Seriously considering sending all the money to Switzerland given the stability of the CHF over the long period.

You get the same protection as the USD without the drama

Electro-Kevin said...
This comment has been removed by the author.
Electro-Kevin said...
This comment has been removed by the author.