Happy New Year to you all, I hope the festive period was enjoyable for you and my thoughts are with all of those affected by the bush fires especially to any of those in the Safety community that were impacted. As the New Year begins, we all start to focus on our goals and desired outcomes for the year ahead. The process of setting goals is critical in my own preparation and I encourage you to be detailed and honest when making them.

The markets certainly did not fail to deliver over the break with record highs being created in the Australian and US index markets. We will focus on the SPI and ASX200 in Australia for our discussion. I can still recall the day the Australian market made its top on the SPI back in 2007 at 6880, there was a fair amount of buzz in our community at the time with many of the instructors and traders all hunting around for tops at that time. The markets started to fall well before the term GFC had been coined and there were many who thought that what became the mother of all declines was just an opportunity to add to their long positions. There is no replacement for the experience of trading through market milestones like this, as on a chart in hindsight it’s pretty straightforward.  I recall waking up in Australia to see the Dow Jones had traded in a 1000-point range overnight and travelled up and down that range multiple times in one session. Textbooks can’t quite prepare you for that.

I have previously discussed the Christmas Rally period and the cycles that have a tendency to deliver over the break. In Chart 1 on the SPI200 we can see the lead up to the markets making fresh and record highs. The typical pattern in December has seen markets run hard through December into January. This was somewhat different this year as we saw the low come in on 2 January and the markets drive higher from there. Also, to note is the general timings of lows in the market in the first week of the month.