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I called the US into recession back in January when the unemployment rate ticked up from its lows by 0.5%. Its never failed to signal a recession. On this basis I applied the same theory to the XAO. If unemployment ticks down from a high by 0.5% then we buy the XAO, if its ticks up from a low by 0.5% we sell the XAO. Here are the stats going back to 1978 from the RBA:
May 1978 BUY @ 346
Jun 1981 SELL @ 721
P&L: +108%
Nov 1983 BUY @ 766
Nov 1986 SELL @ 1421
P&L: +85.5%
Sep 1987 BUY @ 2318 (yikes!)
Feb 1990 SELL @ 1621
P&L: -30.0%
Dec 1993 BUY @ 2153
Oct 1996 SELL @ 2320
P&L: +7.75%
Dec 1997 BUY @ 2579
Feb 2001 SELL @ 3274
P&L: +26.9%
Apr 2002 BUY @ 3363
Still open
P&L: +20.3% (basis todays levels)
September saw the unemployment rate tick up to 4.3% from the February lows of 3.9%, so that's an increase of 0.4% - very close to a sell signal....and very close to a recession.
Food for thought...
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.
May 1978 BUY @ 346
Jun 1981 SELL @ 721
P&L: +108%
Nov 1983 BUY @ 766
Nov 1986 SELL @ 1421
P&L: +85.5%
Sep 1987 BUY @ 2318 (yikes!)
Feb 1990 SELL @ 1621
P&L: -30.0%
Dec 1993 BUY @ 2153
Oct 1996 SELL @ 2320
P&L: +7.75%
Dec 1997 BUY @ 2579
Feb 2001 SELL @ 3274
P&L: +26.9%
Apr 2002 BUY @ 3363
Still open
P&L: +20.3% (basis todays levels)
September saw the unemployment rate tick up to 4.3% from the February lows of 3.9%, so that's an increase of 0.4% - very close to a sell signal....and very close to a recession.
Food for thought...
This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.
Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.
