Market Wrap + Technical Summary 9-11-2012

By Jason Fittler

Quote of the Week

We learn something every day, and lots of times it’s that what we learned the day before was wrong. — Bill Vaughan

What a week, a US election, a Reserve Bank meeting and a horse race.

The market has started to pull back lower this week on the back of a number of issues. To me it is clear that there are still too many barriers for a higher market right now.

This time next year may be a different story.

The US election saw the Congress controlled by the Republicans; this will cause problems with the issues around sorting out the “Fiscal Cliff”  (/grow-your-wealth/2012/9/17/what-is-a-fiscal-cliff.html).

This issue will become big news in January 2013.

Reserve Bank has left rates on hold, you can hear the self funded retires sigh in relief.

The Australian economy is in a tough place, further rate cuts will not provide the stimulus needed. Rates cuts are good for polls, rate raises are not. I think monetary policy is running out of options.

Cash Converters announced a 146% rise in UK loan applications in the quarter, and a 33% rise in Australia. Given they are generally regarded as a lender of last resort we can assume that the workers are hurting.

The Melbourne Cup was a good distraction from all of the problems in life at present.

Technical Summary 

The market internals are still relatively flat, this leads us to fence sitting for now.

We have this week seen the US market start to pullback.

This has triggered a pull back here in Australia.

This could be the start of the pullback we have been speaking about for the past month or so. If anything the rate of descent is to slow to indicate that the market will drop suddenly as such we may see a short lived rally.

What is clear is that towards the end of this year and early next year the market will be lower.