Recent company announcements of strong financial performance have in most instances been followed by falls in the share price. For example, JB Hi-Fi announced a 60% increase in profits, yet the company’s share price fell just under 20%, bringing the total fall from its all time high since early December to around 38%. Given that the market is currently in a period of uncertainty suggests that that these solid companies are being oversold, which means there will be some great opportunities in the not to distant future for those who are patient.

History demonstrates, in times of significant volatility that it is wise to invest in defensive stocks; therefore the top 50 stocks are likely to lead the market over the short to medium term with opportunities likely to come from the Energy, Materials, Healthcare and Telecommunications sector.
 
So what can we expect in the market?

Following the rise on our market early last week, the All Ordinaries index fell away to close the week at 5723.90 points, down 333.90 points, which suggested that it may continue to be quite volatile this week. However, the market demonstrated some stability during the week by unfolding within a sideways range between 5752.40 points and 5583.40 points.

I still expect the market to be volatile until mid next week with it likely to fall away during the early part of the week before moving up again. Short term I expect the market to rise for 2 to 4 weeks, although there is still a possibility it will fall away. That said I do believe the market will return to being bullish in the second half of 2008, and continue to rise into early 2009

This entry was posted on Thursday, February 21st, 2008 at 8:33 am under Market Wrap.

Related posts:

• Share Market Wrap 24th Nov 06
• Share Market Wrap 16th Feb 07
• Share Market Wrap 25th Jan 07

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