Share Market Wrap 14th Sept 07
Last week I attended a public seminar run by the ASX where they introduced their new ASX CFD product to be launched next month. One of the reasons the ASX are launching this product is to capture some of revenues being generated by this the fastest growing area in the share market over the past few years. In talking with the presenters from the ASX I discovered that to date they had received a large response to people attending these seminars, but the alarming thing to me was that 70% of those attending had very little experience in the market and had never traded a CFD before.
Up until this new ASX offering the CFD arena has been delivered via over the counter product providers, whose offerings are normally limited to sophisticated investors, rather than mum and dad retail investors who are being attracted to this area like flies to honey. Some of the current CFD providers or their affiliates have used this attraction of retail investors by running dubious market campaigns, workshops and seminars akin to the snake oil salesman in order to attract new accounts. Given this I believe the new ASX CFD product will go at least some of the way to cleaning up this area in the share market and help protect the retail client, by giving them a more independent and transparent market, which obviously leads to lower risk. Regardless of the ASX participation anyone that is looking to trade CFDs needs to acquire knowledge and experience, otherwise they are taking high risk with their capital in this highly leveraged market.
So what can we expect in the market?
In my last report I mentioned that if the market was going to fall it will most likely do so next week. Whilst as of writing this has been the case, the fall has not been very aggressive, in fact this week has really been one where the market has shown indecision and lack or direction. For more than a week we have seen generally lower volumes traded on the All Ordinaries Index, therefore the indecision in our market could be a positive sign that market sentiment is changing or it could just be the calm before the storm.
The market is constantly changing with new data arriving all the time, given this as an analyst it is important to be careful and not get a fixed view. Therefore if our market continues to hold its current levels or rises over the next week or so, then my opinion will start to change about further falls that I have been expecting. In saying this when it comes to the share market it is often better to have a pessimistic view than an overly bullish one, therefore it is still better to be conservative right now until we can confirm the direction of the market.
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