Technicals | Aug 15 2023
By Michael Gable
The cooling off in US markets continues to look fairly orderly at the moment.
Most people are expecting some more heat to come out of markets and we also have US 10-year yields edging higher again which could put pressure on risk assets.
However, the market often does what you least expect, so we could see the dip buying which we have previously spoken about to kick in now and the market could edge higher again. A likely cooling off in US yields from here will be the "justification" for markets to recover.
Locally, our index has gone nowhere all year and we can look to a worse-than-expected Chinese economy to blame for our market treading water. But treading water is better than a downtrend.
A lot of negativity is coming out of China and the market is generally holding up well, so it will only take some eventual good news to get it going again.
In terms of individual sectors, we have been talking up the energy sector for a while and in the past several weeks we looked at oil stocks such as STO, WDS, and BPT, along with other uranium exposures such as BOE, BMN, and DYL.
The spike higher on Thursday in the oil stocks came on the back of a prior rally, and it was news-related (LNG prices in Europe), so it smacked of FOMO buying near the top. We are still bullish longer-term but suspect that the oil stocks have hit a short-term high.
The uranium names should have further to run and coal stocks are also looking like they have found a low and have further upside.
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