What the Share Price of Construction Stocks are Telling You about the Wider Economy

What do to ABC & BLD Ltd Do?

Adelaide Brighton LTD [ASX:ABC] and Boral LTD [ASX:BLD] are leading suppliers to Australia’s construction, infrastructure and resource sectors. They can be looked at in tandem because of the similarity and overlap in what they do. Combined, they give us a better indication of what lies ahead for the Aussie economy than just one would.

What do the charts look like?

I find it helpful to bring up a chart. Here’s a daily chart of the two stocks superimposed

Adelaide Brighton Boral Graph

Source: STEX

Boral is in red and Adelaide Brighton in green.

Uncanny isn’t it?

Both stocks made their low at exactly the same time in October last year. Coincidence? Or did the market know something?

Both stocks continued to make a series of higher lows in late 2014 and into 2015. Those higher lows told you something in advance. But you already knew what that was…if you can read a chart.

What this tells you about the wider economy

Adelaide Brighton is into all-time new highs, and Boral has punched into a six year high. You absolutely must come to this understanding. This tells you more about the economy than what you will ever read in the Australian Financial Review or the business section of whatever paper you may read.

There may be some choppy waters ahead, but if you think Australia is on the verge of recession, let me be so bold as to suggest that you reassess that notion.

Are you seeing just how powerful the 18 year real estate clock is? Every cycle unfolds just as it describes. This cycle so far has not been any exception.

It truly is the secret weapon in my investment arsenal. It told me in advance that this sector would be the next to break up. And the charts are simply confirming that…before you read about it in the papers. How powerful is that?

More than that, it gives you the confidence as a trader to ignore all the misinformation you see in the financial press, because you know what’s coming next and you can trade accordingly.

Looking forward, we could anticipate improvement in construction figures and continued infrastructure activity…and for this to extend through 2015 and beyond, as this sector still has several good years ahead of it yet. Of course, you’d already know that if you had the real estate clock in your investment arsenal. Every stock trader should have it. Go here to get it. It’s an unfair advantage.

Terence Duffy,
Research Analyst, Cycles, Trends and Forecasts

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Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come — which he details in Cycles, Trends and Forecasts.

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