An­a­lyst tips mar­kets may fall or move side­ways

Townsville Bulletin - - Investor - Tony Rag­gatt

AS stock mar­kets around the world re­act to the threat of dis­rup­tions in oil sup­plies, Townsville stock bro­ker Daniel Gould­ing is sug­gest­ing mar­kets could fall or move side­ways.

Mr Gould­ing, a tech­ni­cal trader and au­thor of the Sex­tant Re­port, said higher oil prices were a neg­a­tive head­wind for mar­kets. His­tor­i­cally, mar­ket tops and rel­a­tively high en­ergy prices go hand in hand, he said.

‘‘ Usu­ally the mar­ket will ex­pe­ri­ence a pull­back of some de­scrip­tion al­though in some in­stances it will sim­ply trade in a side­ways pat­tern for an ex­tended pe­riod of time,’’ he said.

‘‘ Some sec­tors such as the en­ergy sec­tor will usu­ally do quite well in this en­vi­ron­ment. Those sec­tors that bear the brunt in a neg­a­tive man­ner tend to be prop­erty, util­ity, con­sumer dis­cre­tionary and trans­port sec­tors.’’

Mr Gould­ing said most econ­o­mists and mar­ket com- men­ta­tors looked for a mag­i­cal num­ber or thresh­old at which point ris­ing en­ergy prices would de­rail the mar­ket and econ­omy, how­ever, he be­lieved no such break­ing point ex­isted.

‘‘ Ris­ing en­ergy prices are sim­ply the straw that breaks the camel’s back rather than the ac­tual cat­a­lyst,’’ he said.

‘‘ While most mar­ket com­men­ta­tors have been at­tribut­ing the re­cent de­cline to profit tak­ing in light of the re­cent un­rest in the Mid­dle East, the mar­ket has been wor­ried about some­thing since Novem­ber last year.

‘‘ Since then, the per­cent­age of stocks that have been ral­ly­ing has con­tin­ued to fall away and is now at a point con­ducive to a large fall.

‘‘ Whether a large fall oc­curs will de­pend on whether your large play­ers come back into the mar­ket on a mod­er­ate pull­back or whether they sit on the side­lines await­ing much lower prices.’’

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