Australian All Ordinaries To Hell ?
Updated
There's no doubt the Australian economy and share market has seen impressive continued growth up until March 2020.
It's clear from around 87 - March 2020 there market has been in a positive trend, with a rough support line, which is has only briefly dropped below in the 90's and notably in 2009 where it seems to hit a secondary support line in red.
It's clear to me since 2009 the Australian sharemarket has recovered considerably but it has seemingly hugged the green support line for most of the last 10 or so years 3-4 times it has briefly tested and broken support, bouncing back and hugging the line - which seems to tell me that perhaps the economy hasn't been as strong as we've all thought.
Now March 2020 changed everything with the AORD smashing through the green and the red support lines, now I think we're in unknown waters and what happens here really depends on what SCOMO and friends do that doesn't involve running off to Hawaii.
The underlying realities are the Australian economy is built on a house of cards, specifically most peoples net worth is built into their overvalued homes, many which are highly leveraged in highly overvalued property markets in places in Sydney or Melbourne and then it gets worse in some of the regional cities.
Many investors ploughed money into rental properties, driven by the governments generous CGT policies, cheap credit and strong rental market driven by higher property values.
Next is the insane amount of personal debt that Australian have outside of mortgages, credit cards, store cards and a very good lifestyle to match.
But once the economic screws start tightening and peoples money dries up, the ripple effect begin and many landlords may start noticing it in the next couple of weeks when their tenants can't afford to pay their rents.
Now remember to Australia doesn't really produce much, outside of education, tourism, agriculture and some industrial most of the nations wealth comes from digging up shit from the ground, selling it China and buying it back as consumer products.
Australia barely produces automobiles outside of niche things now, hardly produces any electronics, barely produces oil, has minimal refining capacity, etc if the nation can't export for whatever reason it'll go broke and it if can't import well there will be numerous supply shortages soon enough.
I'm glad I sold up my interests in Australia, I don't have faith in the economy over the next couple of years at least, but I rather be VERY wrong and have it rubbed in my face.
It's clear from around 87 - March 2020 there market has been in a positive trend, with a rough support line, which is has only briefly dropped below in the 90's and notably in 2009 where it seems to hit a secondary support line in red.
It's clear to me since 2009 the Australian sharemarket has recovered considerably but it has seemingly hugged the green support line for most of the last 10 or so years 3-4 times it has briefly tested and broken support, bouncing back and hugging the line - which seems to tell me that perhaps the economy hasn't been as strong as we've all thought.
Now March 2020 changed everything with the AORD smashing through the green and the red support lines, now I think we're in unknown waters and what happens here really depends on what SCOMO and friends do that doesn't involve running off to Hawaii.
The underlying realities are the Australian economy is built on a house of cards, specifically most peoples net worth is built into their overvalued homes, many which are highly leveraged in highly overvalued property markets in places in Sydney or Melbourne and then it gets worse in some of the regional cities.
Many investors ploughed money into rental properties, driven by the governments generous CGT policies, cheap credit and strong rental market driven by higher property values.
Next is the insane amount of personal debt that Australian have outside of mortgages, credit cards, store cards and a very good lifestyle to match.
But once the economic screws start tightening and peoples money dries up, the ripple effect begin and many landlords may start noticing it in the next couple of weeks when their tenants can't afford to pay their rents.
Now remember to Australia doesn't really produce much, outside of education, tourism, agriculture and some industrial most of the nations wealth comes from digging up shit from the ground, selling it China and buying it back as consumer products.
Australia barely produces automobiles outside of niche things now, hardly produces any electronics, barely produces oil, has minimal refining capacity, etc if the nation can't export for whatever reason it'll go broke and it if can't import well there will be numerous supply shortages soon enough.
I'm glad I sold up my interests in Australia, I don't have faith in the economy over the next couple of years at least, but I rather be VERY wrong and have it rubbed in my face.
Note
I forgot to mention there's a clear resistance line I forgot to draw in Blue basically from 88 - Feb 2020, all in all it's been clear this has has the resistance and it's tested it, breaking above it pre 2008 crash and then the rest is history. Looking at this chart again, just on appearance it appears the recovery after the Great Recession has been tenuous and ready to drop, looks like Covid was the spark that brought about the inevitable.
Just my thoughts!
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