IT’S THE HALF YEAR BLUES, AND THERE IS PLENTY OF RED INK
GEOFF WILKINSON
HEAD OF RESEARCH, MINT EQUITIES
AND so another quarter wends its way to a weary end. The simple fact is that the S&P 500 is currently down 10 per cent on the quarter, which is woeful enough, but supposedly buoyant China has fallen twice as much. Our money is safely tucked away in a cash ISA yielding 0.003 per cent, so relatively speaking it could clearly have been worse. We have no doubt that the quarterly “management” fee of 0.5 per cent will be wisely invested, but the returns remain extremely paltry whichever way you look at it.
There are obviously plenty of things we could comment on this morning, but one very important development is the recent move on the S&P 500. The index clearly closed at new lows for the year – sub 1,050 on Tuesday night – and although we maybe could give it one more day to claw back some gains, from a technical perspective that puts the bull market hypothesis firmly on hold for now.
Yes, we can rally, even substantially from this level, but the specific conclusion is that the highs for 2010 have already been posted, and we have the implicit potential to trade substantially lower from here.
After weak consumer confidence data from the US on Tuesday, all eyes are now fixed firmly on Friday’s non-farm payrolls figure. With the market already pricing another set of negative figures, any numbers that are better than expected could provide the catalyst for a short-term bounce higher. However, “buyer beware” is the preferred stance for the time being… so be prepared to sell those rallies.