Share Market Wrap 2nd March 07

This market fell over 200 points (3%) in the first half hour of trading on Wednesday (28 February), which was a reaction to the Chinese and American markets falling the night before. The effect of such a large fall on our market, or any market for that matter, often results from an emotional overreaction to media speculation from the ‘mum and dad’ investors. When you combine this with the ease with which we can now use technology to access the share market, it creates extreme volatility in the market, which we will have to come to expect as normal in the future. Professional traders and institutional investors, on the other hand, understand the emotions of the market and the use of technology to take advantage of the lack of experience of the uneducated investors.

So what’s happening on the market?

As I mentioned above the pull back I have been expecting is finally here, albeit a little later than what I thought and more erratic than expected. It is possible that the market will continue to fall away for another week although due to the large fall on Wednesday, and the fact that the All Ordinaries Index has not moved much in price on Thursday or today, I believe it will move up next week. If this occurs, then we should see it rise up to make a new all time high over the next 3 to 4 weeks.

Social bookmarking: These icons link to social bookmarking sites where readers can share and discover new web pages.