Share Market Wrap 7th November 2008

There is an old saying that markets don’t crash at the top but rather at the bottom simply because investors don’t panic at the top given that their shares have made money and they mistakenly believe prices will return to previous levels. This has certainly been the case in the current bear market given that the All Ordinaries only fell 2.7% in November 2007 and 2.6% in December 2007.
However, the falls in recent months (September -11.2% and October -14.%) has accounted for 44.08% of the total fall since the high in November 2007. The fall in October 2008 was the largest one-month fall on our market since the October 1987 crash when the market fell 41% in one month. Right now investors are making irrational decisions and cashing up for fear of further falls which is another signal that indicates the bottom on our market is very near.
So what can we expect in the market?

This week the market rose a little over 7 per cent before falling heavily yesterday in a reaction to the large fall on the Dow wiping off almost half of the weekly gain, and today the market is likely to fall heavily once again. Markets will always test previous highs and lows; therefore the current fall is a positive sign as we need to see the market test the low of 3693.90 that occurred on 28 October 2008.

If the market can stay above this level and subsequently rise there is a strong possibility that the market sentiment will shift from bearish to bullish. While it is possible that last Tuesday was the long term low we have been expecting, it pays to be cautious right now as there is still a possibility that the market could fall to between 3400 and 3500 points; either way we will know in the next week.

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

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