Analyst tips markets may fall or move sideways
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.’’