Election Upset to Drive Rally

[The market has jumped out of the gates this morning with strong buying evident in the banks, as the market breathes a sigh of relief that the Libs were returned to power. Click on the picture above to watch Murray’s analysis of the ASX 200 now that the Australian election is out of the way. You will also learn about using buy and sell pivots to make as much money as possible from winning positions.]

The price action in the ASX 200 today will be fascinating to watch. The huge upset in the election over the weekend will mean that plenty of fund managers won’t be positioned appropriately. There may be a period of adjustment while the market absorbs the ramifications of a Liberal party win.

The knee-jerk reaction will see banks rallying on the back of expectations that the property market will no longer get the stuffing knocked out of it by the changes to negative gearing that Labor was promising. Also, the changes to franking credits for retirees could have weighed on stocks and that threat is removed.

Stocks that may come under selling pressure are gas stocks that may have benefited from an expansion of the Northern Gas pipeline as promised by Labor, and diagnostic imaging companies that ran hard ahead of the election on expectations of a Labor win. Although the chances of the Adani mine getting up and running has probably increased which would keep players exposed to the Galilee Basin well bid.

A solid breakout above last year’s high will give targets towards the all-time high from 2007, near 7,000.

US markets may throw a spanner in the works of such a rally, and I give you a quick rundown of the current state of the E-mini S&P 500 futures now that a weekly sell pivot has been confirmed a few weeks ago.

Keeping an eye on the weekly buy and sell pivots can be especially useful when running a winning position. Using a weekly sell pivot as a trailing stop, for example, can keep you in a winning position for far longer than you would usually be able to hang on to. I show you a few examples of this method in the video.


Murray Dawes,
Editor, Alpha Wave Trader

Murray Dawes is the Editor of Pivot Trader and contributing Editor at Money Morning. He was one of five, from 5,000 applicants, chosen for a graduate position with the Swiss Banking Corporation — now part of banking giant UBS. The bosses quickly cottoned on to his potential and pushed him up the ranks as a futures broker on the floors of the Sydney Futures Exchange. Murray later broke out on his own and developed custom trading systems to trade leveraged financial instruments like futures. Due to his success, Murray became the ‘hired gun’ trader for Australia’s rich and famous. Today, Murray runs a trading service through Fat Tail Investment Research to help everyday Aussie investors use his advanced trading methods.

Money Morning Australia