Share Market Wrap 17th October 2008
I have said before that a week can be a long time in the share market, and I am sure that many investors are wishing that the events of the past week or so were over. Last Friday, billions of dollars were wiped off the Australian market as it plunged 352 points or 8.2 per cent in one of the biggest one day falls in history. On Monday and Tuesday of this week the market rallied strongly, clawing back part of the losses from the previous week, which we now know was a false rally given the market fell heavily again yesterday.
False rallies are common in bear markets and when they occur they trick the uneducated into thinking the market is rising, only for it to fall away again. The golden rule is to never attempt to pick the market bottom or buy into a share just because you think it is cheap, because you never know, it could become cheaper. For regular readers of my report, you will know that I strongly recommend waiting for confirmation before making a decision, and in this market that means a rally over several weeks not days. I suspect we may see a few more false rallies before the market finally bottoms, which I believe will occur very soon.
So what can we expect in the market?
In my previous report I indicated that the All Ordinaries was likely to continue down to around 4000 points by 4 November. However, last week the market fell for five consecutive days to trade just below this level to 3939 points. This move represents the largest decline we have seen in a single week since the crash in 1987.
An important point to note is that neither the All Ordinaries nor the Dow has ever fallen by more than 50% of its all time high (which for the All Ordinaries is around 3400) without rebounding strongly. Despite the recent falls I believe the market is likely to move up over the next few weeks to around 4300 points, before it falls away to retest last week’s low. That said it is possible that the market could fall to between 3500 and 3400 points, which if it does will most likely occur around 4 November. Given this, we need to continue to be patient and wait for confirmation that the market has bottomed before making any decisions to enter.
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
Related posts:
Print This Post
EMail This Post
