Market Musings 150826: Breakouts galore
Market Musings 150826: Breakouts galore
This week has been a good one for stock market investors around the world d the world, with many stock markets, sectors and stocks hitting new all-time highs.
I am personally surprised at the ongoing strong upwards momentum, as there is still no resolution of the Iran conflict or reopening of the Strait of Hormuz to marine traffic.
The Brent crude oil price thus remains near $90/barrel, far above the recent $72 low hit during the brief period when the Strait was open. Equally, long-term interest rates remain elevated, with the US 10-year bond yield close to 4.7% and the 10-year UK gilt yield close to 5.0%..
In spite of these factors which normally would weigh on the stock market, momentum remains strong and investor optimism is high following a strong batch of Q2 results both in the US and in Europe.
Markets that have hit new all-time highs again this week include:
- US (S&P 500 equal-weight index)
- FTSE 250 Mid-Caps
- German DAX
- AEX Dutch index
- Japan TOPIX
- Canada S&P/TSX
- Colombia
Sectors leading the way higher:
- US Healthcare
- US and EU Industrials
- US and EU Aerospace & Defence
- EU Banks
- US Oil & Gas
Strong recovery underway in:
- Korean KOSPI index
- Software
My favourites are:
US Oil & Gas Exploration & Production
There seems to be no obvious resolution of the Iranian conflict on the horizon, so oil prices seems to be set to remain higher for longer. Refining margins stay at record levels thanks to strong demand for refined products and reduced refinery production in China and Russia. Oil & Gas production outside the Middle East should benefit from this positive pricing environment.
Polish stocks
Still cheap and growing well, to benefit from the Polish government trying to stimulate local stock market investment via the introduction of ISA-like tax-advantaged investment accounts.
US Healthcare
A defensive sector that will grow thank to strong drug pipelines and further merger & acquisition activity to consolidate the sector. Long-term growth from ageing populations and to benefit from AI implementation in drug discovery and diagnostics.
FTSE 250 Mid-Caps
UK stocks are finally getting some love, spreading from large-caps now to the mid-caps in the FTSE 250 index. Still cheap and benefiting from a rash of takeovers by private equity firms and foreign companies.
Korean KOSPI index
Hard hit by the recent tech correction after a stellar start to 2026, driven by memory chipmakers Samsung and SK Hynix.Now starting to rebound, still cheap post enormous earnings estimates upgrades for this year and next.
UK recovery stock: Rightmove
One stock that always been high quality due to its near-monopoly in online estate agent property listings is Rightmove. Latterly it was sold off heavily on fears of AI disruption (like the software sector), but like software Rightmove is now rebounding sharply as these fears are seen increasingly as overblown.
I don’t know how long this positive momentum will continue, but enjoy it while it lasts!
Fingers crossed for the week ahead,
Edmund
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5 comments
Investors are Bullish at the top.
So these are an invaluable insights.
Here is an additional source of information for last month and previous months:
Gold and Silver have come back sharply this month which is a relief.
Edmund wrote Aug 1
This has therefore been an excellent stock market for those who can accurately follow trends, and who can rotate between trends rather than sticking with one trend for too long. I for my part have been guilty of staying with particular themes for too long, in my case remaining relatively heavily exposed both to precious metals miners and uranium miners. Both of these peaked back in February and have since given back substantial gains. I remain a firm believer in the long term uptrends in both of these sectors, however given their extreme historic volatility I did not take as many profits as I should have back around the peak in January and February, prior to the outbreak of the current Iran conflict.
There is as much danger in Not Trading as in Trading.
When it is time to Sell, we do not want to. When it is time to Buy, we do not want to.
Often in a hurry at the wrong time.
Towards the end of this summer correction in Gold and Silver, I lightened up with short swing trades rather than filling my boots.
Individual stocks provide best returns despite Individual insecurity.
Money placed in funds under others' management is touched as little as possible.
Etfs follow the trends so have to try and time those.
A list of holdings in each Etfs helps me decide which individual stocks within it are overbought or oversold, value or not and then buy or sell.
If most holdings are too expensive then the Etf is sold.
Selling Colombia Etf.
We have to think of the seasons too. Sectors that do better at different times of year.
September usually poor performance.
Going short some of the other over-bought indices................................
Thanks Edmund, always a good read.
The oil market is a difficult one to call. This Bloomberg Originals link in YouTube is a useful explanation of how the lost 20m barrels of oil per day through the SoH have been 'made up'. Much of it seems a one-off (ie: release of reserves) but there is no doubt the market will change in the long-term as a result of the conflict.
https://tinyurl.com/5bw868fu
The massive gas field that exists offshore Qatar seems a slightly different issue. I didn't know that this field is jointly owned between Qatar and Iran although the gas is used in very different ways.... Qatar exports much of it's share as LNG but Iran uses it's share to power the domestic economy.
https://tinyurl.com/a9ff4sza
Thanks Edmund, very useful.
Thanks Edmund. Always good to lift one's eyes from the UK and get a global perspective.