Share Market Wrap 28 March 08
Given that the volatility in our market has continued to unfold in recent months, many are beginning to question whether the share market is really a good investment. However, as many of you would know with every pull back there are always opportunities that present when the volatility settles. Over the past few months many of the top shares on our market have fallen as much as 30% to 50% in price and while this presents some great opportunities for those who are patient, the question that a lot of investors are asking is when is it time to buy? While I believe there is still some more volatility to come, I expect it to settle in the not to distant future and when it does it will reward those who are patient.
So what can we expect in the market?
In my last report I indicated that if the market fell through 5222 points that it could fall to around 4800 points before rising in the next bull-run. Last week the market fell to 5130.10 points and while it closed higher at 5182 points for the week, the market was still displaying signs of weakness. You will remember in my last report I indicated that the market should rise for at least one to two weeks, and although this was delayed, it looks as though this is occurring now.
While the market has been trading for 13 weeks during 2008, it looks as though this week will be only the second week for the year in which it will close higher than it opened. Whilst this is encouraging, it is not a sign that the down move is over although the strength of the market this week is indicating that the buyers are keen. Given that the market has not risen for more then two weeks since October 2007, I would like to see it trade up for at least two more weeks before I start to change my outlook.
That said I do expect the market will continue to rise over the next one to two weeks before it pulls back once again. I believe the market will bottom out in the not too distant future, and when it does it will reward those who are patient. Remember, the share market is a medium to long term investment therefore as I indicated above, I would recommend sitting back and waiting until the market finds a direction before deciding to invest.
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