What's the driver behind the recent sell off in Equities?


Whilst all the headlines are focusing on Greece, there seems to be a bigger problem in the background. Global growth is weakening: Brazil, the sixth largest economy is slowing; Australia's economy is slowing (which relies heavily on China, 50% of Oz exports go to China), China have a vast amount of problems itself; Europe is contracting and Greece are holding its bondholders to ransom. This 'risk off' mentality was clearly seen at the beginning of the week with money flowing out of speculative assets such as Equities, AUD and EUR.

As I discussed in previous posts, Oil, is the one to be watching right now. This time last year light crude was at $90, now even with the recent sell off it is $105. Whilst the sell off has been down to reopened negotiations with Tehran, how long will this last? The question from Israel and USA is not if they will invade Iran but when, after the elections or before?

So how does this help us as traders? Whilst I am a predominantly technical based trader it's important to understand some of the major economic themes as this how you can potentially get into strong moves early on as well as capture a strong trend. All we've seen so far, is just short covering based on investors coming out of risky assets due to concerning global growth. This provides us with decent opportunities to trade retracements, but of course you need to follow your OWN trading plan and style.

I will post up some charts in the next post on things I am looking at or are in. As I am away for 2 weeks, you won't be receiving any updates (I'm sure you don't want to know about me in 35degree Jamaican and Mexican weather!).

All the best traders....