Wednesday, 28 October 2020
Wollongong, Australia
By Greg Canavan

[2 min read]

In Monday’s Insider, I wrote about how the new algorithm we are testing advised a 100% cash allocation. I also said that was unusual.

At time of writing, it wasn’t altogether clear why it was so risk averse.

But, you got a hint of it yesterday. Stocks fell sharply. The ASX 200 was down 1.7%. As you can see in the chart below, it couldn’t sustain the recent break above resistance. That’s not exactly bullish.

Having said that, it’s not the end of the world either. It might mean the market just needs more time. But I would keep a close eye on the September and early October lows. A break below there would be a big problem.

Source: Optuma

[Click to open in a new window]

What was particularly concerning for the broader market was the weakness in the big miners. BHP fell 2.2% to its lowest close in five months. RIO fell 2.5%, its lowest close in five months too. That makes it hard for the headline index to move higher.

It wasn’t just resources though. The All Technology Index fell 2.8%. The Small Ords fell 2.15%, while the ASX 200 Energy Index sank 2.9%.

All up, it wasn’t a good day. There’s no sign of a bounce in early trade today. And in case you were wondering, the computer still says no. Its advice? Stay in cash.

What’s behind the fresh bout of selling?

Well, hopes of more stimulus in the US appear to be off the agenda until after the election. That’s not good news for an economy that is still in need of support.

Then there’s the little matter of the upcoming US election in less than a week.

There is way more uncertainty over the outcome than the market is currently pricing in.

Maybe the market is waking up to this fact?

Yesterday, I chatted with Strategic Intelligence Australia editors Jim Rickards and Nick Hubble about the upcoming election, the likely outcome and the implications for markets, and Australia.

It was a fascinating conversation. And we’ve made it available for you to watch, below. Jim’s knowledge of US election history is incomparable. He tells you why this election is one of the most important in history. He also explains in detail why the polls putting Biden ahead are wrong, and how he comes to the conclusion that Trump will win.

It’s a must watch conversation. You won’t get such detailed and compelling analysis anywhere else. The mainstream media will just give you virtue signalling snippets of how gauche Trump is, while ignoring Biden’s dementia and corruption.

You can watch the full interview by clicking on the thumbnail below…

Click here for more information and to subscribe to Jim Rickards’ Strategic Intelligence Australia.