Despite oil prices falling around 23% over the past two months, we are still paying high prices at the pump. The reason for this is that the Australian dollar has also fallen around 14% against the US dollar during the same period, which has effectively eroded any benefit from lower oil prices.

If the price of petrol is to fall, we need oil to continue its downward trend and the Australian dollar to stabilise or rise against the US dollar, which I believe is likely over the next few months. That said I expect oil will find support around $100 or slightly below before rising up to test the previous high early next year, so if petrol does fall it many only be short lived.

What can we expect in the share market?

While the market was bullish for more than a week, it has fallen heavily over the last three days as investors react to the pull back on the Dow. In my last report I indicated that I expected the market to continue to rise for the next 1 to 4 weeks before moving down again. Technically the past week has been an up week given that the market traded higher than last week. And despite the heavy falls in the past three days I still believe the market will be bullish until the end of the month before it falls away for one or two weeks.

I am still confident that that the market will be bullish over the next 12 to 18 months, where there will be plenty of opportunity to take profits from several of the large companies on our market, once investors shake off the negative sentiment. That said I don’t believe it will be all smooth sailing but once the momentum increases so will the market confidence.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

Next Tuesday the RBA will meet again and it is almost certain, given the current economic conditions, that the official interest rate will be reduced. It is also likely that we will see further cuts over the next year which is exciting news for those who currently hold high levels of debt.

Reducing interest rates will go a long way to restoring business and consumer confidence, and with the increased confidence we can expect share prices to rise. While this is positive, investors have been hit hard over the past 12 months, and their confidence will take some time to restore. Historically, investors tend to let their emotions override logic, which then affects their ability to make rational decisions in regard to the management of their portfolio. While many investors have rightly exited the market during these volatile times, unfortunately many will wait too long before considering the opportunity to get back in, which is usually after the profits have been taken by the wise and educated.

So what can we expect in the share market?

Last week I indicated that the All Ordinaries Index was displaying signs of indecision, and that it could not continue to stand still as it had done over the previous 4 weeks. This week it appears as though the market has finally decided on a direction and the good news is it is up. But the question on most people’s mind is this just another short term run or is the upward move sustainable?

Today the market has traded to its highest levels in a month; therefore I believe in the short term it will continue to rise for the next 1 to 4 weeks before it moves down again. Right now the longer the move up in both price and time the better.

It is still too early to confirm that the low of 4829 points on 5 August is the long term low I have been expecting, but if it is then get ready for a 12 to 18 month bull market. Although I am now more bullish in my outlook, caution still needs to be exercised as it is possible that the current move up is a suckers rally and that the market could fall to my next price target of 4300 points.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

With the significant pull backs in the market of late, the managed funds have commenced their old clichés’ of ‘time in the market’ rather than ‘timing the market’ in an attempt to allay investor’s fears. The issue I have with this is that ‘time in the market’ is probably the most perpetuated myth in the industry. The reason why we hear the words ‘buy and hold’ or it is ‘time in the market that yields returns’ is because the industry cannot time the market. The funds are simply too large to manoeuvre with any speed. Consequently, the public is cautioned through advertising slogans about the perils of marketing timing.

Many in the industry claim that ‘market timers’ sell when a market is low and are out of the market when the inevitable rally occurs. They assert that market timers’ run the risk of being out of the market at the trough of a decline when sentiment is at it most negative and potential returns are at their greatest. To substantiate this argument they suggest that if you are out of the market on the 20 biggest days that the market is rising over a 10 year period, your return will fall substantially. However, the inverse of this argument is that if you are out of the market on the 20 biggest days that the market is falling, it stands to reason that your returns would surpass the market average over any 10 year period. After all, markets don’t crash up, they crash down.

So what can we expect in the share market?

Last week I stated that the All Ordinaries Index was displaying signs of indecision, and this week is no different. It is almost as if the market is in a holding pattern until reporting season is over given that the market has opened and closed within a 100 point range in each of the past four weeks.

Something has to give as the market cannot stand still. The institutions have accumulated $100’s of millions of dollars over the past year and they are waiting for the opportunity to enter the market. Once they do, it is highly likely that the market will rise. Before you get too excited, however, it is still possible that the market could fall to my next price target of 4300 points. For the market to indicate it is starting the next bull run, it needs to hold above 4800 points in the short term and rise to above 5111points over the next few weeks.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

Reporting season is always interesting and so far it has not let us down. On Wednesday the Commonwealth Bank announced a $4.7 billion dollar profit, which equates to a massive $90 million dollars per week. Now call me cynical, but over the last 12 months the banks have informed us how hard they have had it with the sub-prime mortgage meltdown, yet in reality it is the average Australian who is doing it tough with high interest rates and bank fees.

While I agree with the notion that companies are in business to make a profit, you have to question at whose expense, particularly when the service you receive from banks is relatively poor. In my opinion, we need more competition in the market rather than a decrease as will occur with the merger of St George and Westpac.

So what can we expect in the share market?

While the All Ordinaries Index moved over a range of 138 points this week, it displayed signs of indecision given that the close on Thursday was only 5 points lower than market opening on Monday. That said the indecision is a positive sign, as it is quite common at markets tops and bottoms and usually leads to a change in the trend.

Technically this week the market has traded up given that the high for the week was 5111 points, which was also the highest price achieved in the past month. This could indicate that the buyers are now coming back into the market, although given the current market indecision, I still recommend investors be patient right now until we get a stronger sign that the market will continue to rise.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au

This week the reserve bank has hinted at a possible rate cut in the near future, and with oil prices falling heavily over the past few weeks, it appears as though the table may be turning for consumers. While it is still too early to determine whether the worst is over, any reduction in the cost of living has to be beneficial for the economy and the share market.

That said it is important to understand that high levels of borrowing has fuelled the sub prime mortgage meltdown and over the past two decades Australians have taken on increasingly levels of debt to the point that we are now in a negative savings pattern. Given this, it is possible that we as a country may have our own mortgage meltdown not unlike what occurred in the US sometime in the future. Given this, I would highly recommend consumers use extra cash flow to reduce debt levels in the coming years and be more conservative in the future when using leverage.

So what can we expect in the market?

This week the All Ordinaries index fell to a low of 4829 on Tuesday 5 August, which is in line with my target of 4800 points. Since then it has risen strongly to reach a high of 5055 as of Thursday 7 August. It is possible that the low on Tuesday is the low that I have been expecting, however, it is still too early to tell as it is still possible the market could fall away to my lower target of 4300 points over the next couple of weeks.

For the market to prove it is bullish again, we need to see it hold above the low of 4829 points and rise over the next month. Right now it is far safer to sit and watch the market unfold before making any decisions. There are many solid shares showing positive signs that they will trend up in the near future, but before we start buying we need to confirm the market is bullish. Again I encourage investors to sit tight as you will be rewarded for your patience.

Dale Gillham
Chief Analyst
Wealth Within

Dale Gillham, ‘one of the country’s most respected analysts’ (Wealth Creator Magazine, Nov/Dec 2004), sought after key note speaker and author of the best selling book ‘How to Beat the Managed Funds by 20%’, has assisted thousands of traders and investors to become confident and profitable in their direct share investments. Tired of an industry saturated by quick fix gimmicks and expensive short-courses, Dale co-founded Wealth Within to provide ‘ real education and ongoing personalised support’, as well as independent investment advice to traders and investors who have become disillusioned by the market for one reason or another. As testament to this, Wealth Within launched Australia’s first and only nationally accredited Diploma and Advanced Diploma of Share Trading and Investment.

For more information please visit www.wealthwithin.com.au