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Market Analysis Dividend Shares

[WATCH] Closing Bell — Rates up, Stocks down

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By Murray Dawes, Saturday, 25 February 2023

In today’s Money Weekend, there is a strong case that we’re witnessing a slow topping formation before a more substantial sell-off. Watch the Closing Bell video for an overview of the bearish case for stocks in the immediate future and the affect changing interest rate expectations is having on the US dollar, Nasdaq, gold, and more.

My goal over the past few weeks has been to point out the risks that stocks could keel over again are rising.

The ASX 200 may be just 5% from its all-time high, but the price action over the past 18 months has been quite bearish, and there is a strong case that we’re witnessing a slow topping formation before a more substantial sell-off.

 

Interest rates are racing higher as markets adjust to the ‘higher-for-longer’ theme, and stocks have held up pretty well in the face of those changing expectations over the past month.

But the S&P/ASX Small Ordinaries Index [ASX:XSO] remains 20% below its all-time high. It’s a tale of two markets, with large-cap bank and resource stocks doing well but everything else is struggling.

The speculative end of the market is in a serious bear market, with many stocks continuing to trend lower and lower every day.

If you like playing around in the smaller end of the market, you should keep your position sizing pretty small and be prepared to wait out further downside.

Until interest rates peak, stocks are going to find it tough.

Commodities are starting to feel the heat from the rising US dollar, but copper is holding up better than most.

In today’s Closing Bell video, I give you a quick overview of the bearish case for stocks in the immediate future and show you the affect changing interest rate expectations is having on the US dollar, Nasdaq, gold, copper, nickel, rare earths, and lithium.

Until next week,

Murray Dawes Signature

Murray Dawes,
Editor, Money Weekend

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Murray Dawes

Murray Dawes is our resident expert trader and portfolio manager. He is a former Sydney Futures Exchange floor trader who went on to design custom trading systems and strategies for ultra-wealthy clients (including one of Australia’s richest families). Today, his mission is to help ordinary Aussie investors make profitable investments, while expertly managing risk.

He uses his proprietary system for his more conversative and longer-term-focused service Retirement Trader…and then applies the same system to the ultra-speculative end of the Australian market in Fat Tail Microcaps (this service is strictly limited and via invitation only).

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All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

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