I posted the following graphic in the Charts of Interest. However, I feel it deserves a more expanded examination.
In the years following the GFC the domestic market has lagged markedly behind other world markets. The shock of the GFC has had a profound impact upon the psyche of investors – that combined with a rampant real estate market has meant a lack of retail support for the local market. There has always been institutional support since most investment groups are forced to invest in equities by virtue of their various mandates. All that money from compulsory superannuation has to go somewhere.
As someone who trades breakouts, it is the most recent breakout by the All Ordinaries is of interest to me, as is the fact that we are not far away from our all time high.
The confluence of events has moved from status from modest bull to outright bull – my models are now indicating a preference for local stocks in lieu of US stocks. This has not happened since the GFC. However, it should be noted that I am not wedded to this position – if the market changes and gives up its gains then my position will shift as well. My ego is not invested in the idea of owning domestic stocks – if it all goes pear shaped I will be the first one out the door.
Yes there have been some wonderful gains over the last 3 months or so but in recent days we have seen the usual pullback. I’ve given back some of my gains & am now having to watch my positions closely. I don’t like to tighten my stops too much as I’ve been stopped out so many times before only to see the bull run continue.