Change Is Coming To Australia

Below is an extract from article from FN arena, it gives our technical analysis Daniel Goulding a great wrap up.

Rudi's View: Change Is Coming To Australia

FNArena News - August 03 2011

By Rudi Filapek-Vandyck, Editor FNArena

A Special Reward goes out to Daniel Goulding, publisher of The Sextant Market Letter, a weekly newsletter focused on the Australian share market. Goulding, who's an avid technical analyst with keen interest in history, philosophy and Elliott Waves, has been on the opposite side of most market experts and commentators' views for a while now, telling his readers the Australian share market remains in a bear market and all those predictions about the index targeting 5500 and beyond are best to be ignored.

Goulding has an end-of-the-year target of 4500 for the ASX200, which against current market developments, seems highly plausible. This is not why he deserves a special mentioning. Ever since the share market peaked in April last year, Goulding has been predicting a sideways pattern at best, and certainly nil, zero, zilch chances of breaking above 5000 on a sustainable basis.

Gosh, I sometimes receive complaints about showing a lack of enthusiasm for the upside potential in Australian equities, so I can only imagine what kind of emails on occasion must land in Goulding's inbox. Picture this: while about everyone with a voice in Australia was predicting an up-year for Australian equities at the start of the year, and most forecasts were for robust earnings growth and expanding PE multiples, so 20%+ investment gains, Goulding stoically set his target at 4500. Apart from Tim Rocks at BA Merrill Lynch, who happens to have a similar target, Goulding has been in a lonesome spot all this time, until recently. The team at JP Morgan has now joined both with an equally sobering outlook and most other experts have been scaling back their projections recently, even though it has to be said: not everyone has as yet given up on the share market surging well above 5000 this year. (No, really).

I don't know where the share market will be at year's end and throughout the years I have steadfastily ignored all invitations from either media or subscribers to "give it a go". I think it's a mug's game and the observation that many experts were off by a solid 1000 points in 2010, and many are looking like they will be off a solid 1000 points this year, only proves my point. Back in 2008, when I was in a similar position as Goulding, warning everyone crude oil was not going to rise towards US$200/bbl, as widely predicted, and that investors jumping on board the bandwagon were going to lose a lot of money, I did not predict crude oil prices were going to revert back to US$32/bbl on dayone - all I knew, and I carried this with conviction, was that US$200/bbl was just silly.

Just as silly as the Deutsche Bank strategist (now at Citi) who predicted the ASX200 would be at 6000 by December 2010. This market is not going to rise anywhere near 6000 for a long time. Similar to Goulding and Rocks, I have remained skeptical as to whether the ASX200 could rise above 5000, and stay there. My rationale was as simple as can be: is earnings growth in Australia strong enough to sustain such a level? My analysis said "unlikely". Turns out my analysis was correct.

You can subscribe here to the paid report, The Sextant Market Letter.