Market Commentary for December 2017

"Christmas rally and the U.S."

By Alan Hull

This commentary is in part or entirely created using extracts and comments from my weekly Blue Chip Report. For more information about the Blue Chip Report, including subscription details and a recent sample report, go to Blue Chip Report

At the end of last month I wrote....

The major U.S. Stockmarkets have broken out to the upside. European Stockmarkets are up and so are key Asian Stockmarkets, Japan and China. Even the Australian Stockmarket has broken out of its recent malaise and is on its way to 6,000 points. So if it quacks like a duck, walks like a duck and swims like a duck...then it's probably a duck. And so this is probably the global rally I've been expecting and the start of a very prosperous Christmas rally.

And given that nothing has changed, the recommendations I made last month are also still valid...

...my recommendation is about a 50/50 split between our local market and the U.S. markets. The reality is that they are clearly outrunning us and will probably continue to do so. Furthermore the most profitable trading strategy I currently offer is the U.S. Top 10 Portfolio service. So it's a great pity that it's also the most poorly subscribed service as well.

But I am pleased to report that there has been a significant uptake of our U.S. Top 10 Portfolio service since last month.  And I guess I had better show you some current charts, to prove to you that I'm not making this whole 'Christmas Rally' thing up. Here are some of more important index charts from around the world. This latest rally is being led by the NASDAQ, but is definitely worldwide...

The other thing that happened since last month is quite a lot of people have been in touch with Dean Smith from Primary Securities about readying themselves to trade and invest in U.S. shares. And this is a really good thing because the way I read the tea leaves, we are all going to be investing in the U.S. (as well as Australia) within the 5 years. Invest in Australia for income and invest overseas for growth because as things stand, the only growth that we can expect is in the event of a commodities boom...and the next one is not due for a very long time.

What is due fairly soon is a major downturn and while I can easily short sell U.S. stocks with Dean, directly short selling Australian shares means using derivatives, like CFDs which carry considerable risk. Interestingly, CFDs are actually banned in the U.S.. And right now there is a major technology boom going on, which most Australians are barely aware of, let alone investing in it. Social media stocks are running (like Facebook) and so are the hardware companies that support them (like Apple). Then there are green energy companies like Tesla, building electric cars and pioneering solar electricity storage systems.

Anyway Dean has been helping my clients access overseas Stockmarkets for years. The brokerage is in the same ballpark as Commsec or NAB Online and you'll note that these platforms are also readying themselves for U.S. trading. But they are a country mile behind the Interactive Brokers platform Dean uses, as they can't short sell and they charge a lot more for trading U.S. stocks than their local brokerage. I know because I use these platforms myself. And yes...you can hold U.S. stocks in your SMSF. Here are Dean's details...