Do read this article by James Frost! It is excellent and worthy of careful attention. It is not just Europe that is giving cause for concern. It would seem that we can also expect weakening demand for our iron ore from China.
BHP and RIO shareholders have already been hard hit by falling share prices, and it would be a brave man who would consider that they could not fall any further.
There is something comforting however in putting on technical analysis spectacles. Sure it is wise to be as well-informed as possible about the business and economic climate, but sentiment is in constant flux. Markets are driven by the changing balance between buyers and sellers; a balance influenced by the flow of news and opinion.
The strength of technical analysis is in listening, but in not being swept away by a tsunami of news releases. Go back to the charts, and follow them closely instead. It never ceases to amaze me how bad news can be greeted by an unexpected lift in share price, and buoyant profit announcements provoke a fall. Equally surprising is how quickly the gloom of one day can dissipate.
Of greatest concern to me is my level of indebtedness when markets are most exuberant; and having cash in hand to buy the bargains when all is “doom and gloom”.
Categories: Trading opinion