Shareswatch Australia

If you were to believe some of the ramblings on mainstream media sites you might get the impression that Australian stocks have on occasions bounced back strongly and that in some way this is a reflection of how well the Australian economy is doing. However the reality is that the Australian stock market has been trending downwards since July and many stocks are simply limping from one week to the next.

Over the last few weeks the tragic events in Japan and the political unrest in the Middle East have shown just how fragile the Australian stock market is. Investors appear ready to move quickly out of shares and shift funds to less riskier assets when they sense trouble. This suggests to me, that people don’t quite believe that the Australian economy is as robust as many market commentators would have us believe.

Now that 2010 is behind us, let’s look at some stock market charts for last year and see if we can pick up any trends that might be of some use  as 2011 unfolds. Do the charts reflect a booming Australian economy and set the scene for a bull market in 2011? Or should we be a little more cautious?

Over the last few months it has become increasingly difficult to write about the Australian stock market simply because not much has been happening.  During the last 12 months the market has basically moved sideways with just the occasional dip or rally to break up the boredom.

Despite a fairly nasty stock market correction over the last few weeks the Australian market did not fall anywhere near the lows of March 2009 and as I have been saying for nearly a year, we won’t see those levels again for some time,  if ever.  So now that the market correction appears to be over, what are stocks, oil and gold prices likely to do during the next few months.

Stock markets around the world have had a very volatile run over the last few weeks with everything from debt levels in Europe to housing statistics in the U.S.  giving scaring investors. But during times of market volatility it is important to try and spot the longer term market trends and not get carried away by sensational headlines or daily market swings.

For more than a week investors have been watching stock markets across the globe drop sharply as concerns over debt in Europe have raised doubts in people’s minds that a global economy recovery is really taking shape. But is the current correction really that bad, and is there a chance that stocks have fallen too far, too quickly?

As the Australian ASX All Ordinaries Index slowly crawls towards the 5000 level again, now is a good time to look at how some stocks have come through the global financial crisis. Does it look like a global recovery has finally taken hold, and is the Australia stock market poised to surge higher over the next few weeks?

Despite how convincing market experts appear on television or how cleverly they put pen to paper, the truth is that nobody knows for sure how the global economy will perform next year. For every positive sign or trend there is a worrying one, and despite the Dow Jones having some strong days recently the fact is the U.S. economy is still in bad shape.

Well September passed rather uneventfully as far as the stock market was concerned although in the last few days, it has pulled back somewhat. However the overall trend is undoubtedly upwards and this looks like it will be maintained for the rest of the year. Despite plenty of gloomy views the bull market lives on, at least for now.

Since the beginning of May the Australian stock market has basically moved sideways and at present there is no clear trend in place.  Eventually a trend will emerge so the question is:  will the Australian share market rally or move down over the next six months or so.

Sometimes when confronted by a seemingly endless barrage of economic data it is beneficial to just grab a cup of coffee and calmly review a few stock market related charts to see if they are trying to tell us something. Yes it is pretty chaotic in the global economy these days but believe it or not, some order appears to be creeping back into the Australian stock market.

One question that investors need to consider amongst all this market turmoil is; has the dream run of the Australian stock market come to end? Perhaps for example the days of the Australian market (ASX) outperforming the Dow Jones Index are over and we need to be prepared for less glamorous returns? We might even have to put aside our patriotic feelings and look offshore for better returns in the future?