US traders remain pessimistic, pushing stocks lower into the close on Friday, ASX futures down 80 points

The ASX 200 will retest its 2015 lows today, given the sharp move lower in ASX 200 futures (first chart) which would see another 80 points stripped off Friday's 4,991 ASX 200 close if proven accurate. US oil producers will be struggling to stomach the US$32 lows that we've seen over the last two sessions, and the energy sectors of the major US indices still have plenty of room to fall, having managed to significantly outperform the falling crude market over the past 18 months of heavy price declines. This is illustrated in today's second chart, showing the decline in the price of US WTI crude oil (black line) versus the decline in the iShares Dow Jones US Energy Sector Index Fund.

It was a particularly pernicious week last week and if it felt particularly so, then today's last chart will show you why. This is a weekly chart the the size of the bearish candlesticks illustrate moves that are particularly significant for the ASX 200 market. The S&P 500 experienced the same weekly fall (~6%) back in August 2015; however, you need to track back to 2011 to see similar examples for the ASX 200.

The fear of share market investing is powerful, given the accuracy of price movements and the bearing that these well-reported movements have on portfolios. However, if the Sydney property market offered up the kinds of yields being offered by many of the blue chip stocks that we have covered recently, inventory would be exhausted in a heartbeat and yields pushed back down by rising prices. There is no such logic being applied in the stock market at present, and this does present a good buying opportunity for those who--even if you want to factor in GFC-like cuts to dividend payouts among banks and insurers--can build a great source of income if they're willing to live with the changes in price and vivid reporting that comes with an investment in exchange-traded securities.

Rivkin Local members can visit https://members.rivkin.com.au/articles/local/january-2016-blue-chip-strategy-rebalance.aspx and take their pick from the list of available blue chip stocks with high yields, with particular focus on the banks and insurers for a track record of less volatile earnings.
  


Source: Rivkin, Saxo Bank

To view the Rivkin economic calendar and Global Markets matrix, members can click here.

This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

Complex product warning

This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

This article contains information about CFDs, which are considered complex financial products. Please click here to read ASIC's "Thinking of trading contracts for difference?" document before considering an investment in CFDs.
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