Technicals | Apr 08 2025
By Michael Gable
Share markets are seeing some of the quickest declines outside of covid, the GFC, and the Great Depression. But due to what? A press conference? If a press conference can cause this, then a press conference can fix it.
Could Trump just as quickly announce some amendments to his plan, show the world that countries are buckling under his supreme negotiation skills and provide proof that he is "winning"?
If he delays demonstrating any amendments to his tariff's plan, then like in previous market crashes, the US Fed may inject liquidity to calm markets. Either way, markets can bounce back ferociously.
Unlike previous market crashes, there is nothing fundamentally here in place that needs a long time to be fixed. Initially we had bond yields falling as a result of "Liberation Day". But as of last night, they are climbing again.
Trump needs to get to a stage later this year where interest rates are low, the US has some better trade deals, and, most importantly for us, markets are calm and heading higher. He needs this for the 2026 mid-terms.
The current confusion will therefore have to give way to a bit more logic and those panicking now will calm down.
As a result, I expect a relief rally pretty soon, possibly in the next day or so. The question is, after that relief rally, where to go from there?
Investing and building a business requires confidence. Will businesses and investors fully regain their confidence in Trump? If the path that the US is going down becomes more uncertain, for a range of reasons not just tariffs, then what does that mean for stocks?
Will investors rotate from businesses with uncertain futures to those that are cheaper and more dependable for a while?
Gold has been rallying for a year now. Since we identified that breakout 12 months ago, it has trended strongly and we have reason to believe it will continue to do well.
It is also worth paying attention to what happens with other hard assets in the next few months, whether they are start to see some strong inflows. For now, we expect markets to react positively to any news this week that calms the nerves and we should see a bounce.
From there we can reassess. Ultimately, we can analyse it all until the cows come home, but if markets are going to be harder this year, then the solution is less analysis, not more.
It will be to follow the trends and run trailing stops, regardless of your views or what the business does.
Today we offer a technical view on AGL Energy ((AGL))
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