Technicals | Nov 15 2022
By Michael Gable
What a difference a day makes, or even a week. A positive surprise in US CPI has ensured that the relief rally in markets continues on.
However, the Australian market has had the extra benefit of China starting to ease some covid restrictions, which has sent a rocket under resource stocks.
Our observation a week ago was that despite all the bearish commentary on resources, we could see that proper money was pouring back into the major miners and energy stocks and that they were a buying opportunity. That upside looks set to continue for now.
We have spoken about being most of the way through this bear market, and last week's US CPI is now giving us the light at the end of the tunnel.
It is only one data point, but it means we now have more certainty around where inflation is heading, which means we have a bit more certainty on what interest rates will do, and therefore when markets will have bottomed.
Don't worry about recession, we all know that it is coming and markets bottom at the start, not the end, of a recession. The next few months will remain volatile as we get the last couple of rate rises out of the way, but the overall environment to trade is now looking a bit easier than what we had only a few weeks or so ago.
In this week's report, we have a chart on Charter Hall Group ((CHC)).