The OGIG chart (an ETF with a portfolio containing many QV shares) has been a classic chart performer. It gave a brilliant moving average buy signal in April 2020 and an equally brilliant sell signal in December 2021 when I turned bearish of the whole market on Quentinvest. It subsequently tried to rally in August 2022 but the rally was quickly snuffed out and the falling Coppock indicator, which now reads minus 97, has been declining since March 2021.
There is a new breakdown on the chart with a dead cross on the moving averages in September 2022 and, if it was drawn in, a new trend line breakdown. The presumption must be that the rally has failed and these shares are going to fall further. There are many charts that look broadly like this.
The obvious conclusion is that the stock market is trying to find a level which is lower than the current level. $25 is a strong level of support for OGIG but that doesn’t mean the shares won’t fall further. It just explains why, after a steep decline, they rallied from here.
A bear market in full flight is a savage phenomenon. There is no telling what this price might go to, $20, $15, who knows. One day it will turn and it will all be different but it has not happened yet.
Shares are getting hammered and there is much newspaper speculation that the rising interest rates that are knocking the stuffing out of share prices are going to do the same to the property market.
I am not so sure. Rising interest rates and sharply higher mortgage rates will send tremors through the property market but the UK property market, especially in London and the South East, is strongly underpinned by supply and demand. Supply is limited and demand is strong.
Inflation is sending building costs and therefore replacement costs through the roof. Now that I live mainly in Saffron Walden and London has become a place I visit I am reminded how buzzy and fabulous it is even in ultra respectable Kensington. If you judge a place by the cars it is unbelievable with Ferraris,Bentleys, Porsches and Teslas everywhere. I love living in Saffron Walden but I don’t love London any less. It is such a cool place and restaurants are springing up and buildings are being renovated all over the place at least in my part of London and so many people eating and drinking outside in the seemingly endless summer we are enjoying.
A time traveller from the 1950s when I was growing up and the J.Lyons in Piccadilly was the only restaurant in town would be stunned by London now; as though it had turned into Monte Carlo.
If you like looking at pretty girls and even at my advanced age I still do this place is wow – bombshells strolling around all over the place, with smiles that would stop Brad Pitt in his tracks.
That is totally irrelevant, I know and will irritate my daughter when she reads this but life is too short to pussyfoot around. It also kind of puts the stock market in its place. There is other stuff in life that is important and doesn’t go away just because we are in a bear market.
There is apparently a rule that the stock market goes up and down with hemlines well I saw a Chinese (Asiatic) girl this morning who clearly didn’t get that memo.
My feeling is that the property market is in good shape and the next big move will be up and could be pretty insane. We will see.
There is also something odd going on with the economy, here and in the US. All the commentators are looking for recession and part of the reason why shares are falling is that this interest rate cooling recession keeps on not arriving, which threatens even higher interest rates. It seems like the global economy is very resilient and even if there is some sort of downturn it looks as though the direction of travel is onwards and upwards and that will surely be good news for share prices eventually.
So, for the moment, it is all about patience.