To Trend or Countertrend – that is the question

Over the past few weeks I have been continually asked what people can do in the share market to hold onto their investments, particularly in the commodity markets. So over the next few weeks let’s look at matters relating to trading the commodity markets and I’ll answer your questions with the aid and resources of MDS Financial Group Ltd, a publicly listed diversified financial services company based in Sydney, Melbourne and the Gold Coast for which I am the chairman of the board.

“Should I follow the trend?”

The traditional approach to share trading with technical analysis is to follow the trend, an approach which applies to the gold or oil market too. But while there are times when it is safer to move with the crowd, but at times of market extremes it pays to be contrarian and savvy. If the crowd is headed for greener pastures, tag along. But at times of market extremes it pays to break free from the crowd. There is no point following the crowd when it’s headed for the slaughterhouse.

“What’s happening with crude oil?”

Commodities have ridden the market sentiments of fear and greed and as is typical these sentiments end in extremes. Crude oil is a good example of what happens when markets move to extremes. This rise of crude oil occurred in tandem with the demise of the US dollar. Now that the fortunes of the US dollar have reversed, we are seeing a corresponding drop in the price of crude oil.

MDS Financial maintain offices in Sydney, Melbourne and the Gold Coast. NISER is happy to assist local businesses and if you would like to discuss any if these issues further or have any questions you may like answered please contact NISER at niser@niser.org.au or 5442 5050 or your own financial advisor.

I collated this research for your information from The Cube Financial Group PTY Ltd AFSL 232455 (“Cube Financial”) a subsidiary of MDS Financial Group Limited with the following disclaimer: Cube Financial has made every effort to ensure the reliability of the views and recommendations expressed in this material. The information presented by Cube Financial is based upon information known to us or information obtained from sources external to the company, which we believed to be accurate and reliable at the time of publication but we do not warrant its completeness or accuracy, or warrant any results from the use of this information. This information is prepared for the general information of traders and investors. The information does not take into consideration the specific needs, investment objectives or financial situations of any person. Any individual reading this should discuss, with their financial planner or advisor, the merits of any recommendation or offer presented in this material for their own specific circumstances and realise that not all investments are appropriate for every individual.

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