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Wall Street Fragile

Technicals | Jan 31 2017

By Michael Gable 

Yesterday we saw some early confessions from Servcorp (SRV) and Aconex (ACX), down 19% and 45% respectively. As we go to press, Virtus Health (VRT) has come out with a profit downgrade. Unlike Brambles (BXB) last week which was a stock of ours, we luckily don't hold any of those that fell yesterday. But as we've said before, it can't be avoided. Being in the market means that investors are exposed to these risks.

Yesterday's Australian Financial Review had an article on some "rock star" fund managers such as John Sevior, Hamish Douglas, and Kerr Neilson – all underperforming last year, mainly due to the last quarter or so. All the professionals cop a bit of heat every now and then in this unforgiving market.

However after two years of going nowhere, our market is poised to do well this year, and focusing on the right areas would make it even better. But as we mentioned recently, the Australian market is due for a short term pause. And last night, the US markets shown us the first signs of some short-term weakness. We have a chart on the Dow Jones [Industrial Average] in today's report.

After the initial rally on the back of the US election, the US market has actually gone nowhere for over a month now. This congestion under the 20,000 level was a bullish sign, as it was preparing to break higher. However, after doing that last week, it has failed to kick on. Last night was a warning sign where we saw markets gap down and reject those higher levels. The late rally before last night's close has seen the Dow Jones respect support for now, but cracks are appearing. Further downside from here in the next few days would be confirmation that we may see the US give back some of the gains seen since early November.

Content included in this article is not by association the view of FNArena (see our disclaimer).
Michael Gable is managing Director of  Fairmont Equities (

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management, deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2


Michael Gable is an Authorised Representative (No. 376892) and Fairmont Equities Pty Ltd is a Corporate Authorised Representative (No. 444397) of Novus Capital Limited (AFS Licence No. 238168). The information contained in this report is general information only and is copy write to Fairmont Equities. Fairmont Equities reserves all intellectual property rights. This report should not be interpreted as one that provides personal financial or investment advice. Any examples presented are for illustration purposes only. Past performance is not a reliable indicator of future performance. No person, persons or organisation should invest monies or take action on the reliance of the material contained in this report, but instead should satisfy themselves independently (whether by expert advice or others) of the appropriateness of any such action. Fairmont Equities, it directors and/or officers accept no responsibility for the accuracy, completeness or timeliness of the information contained in the report.

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