Share Market Wrap 8th Feb 08

While many of us have been through numerous economic cycles during our lifetime with fond memories of the great financial boom times followed by the gloom and doom of a recession, as a society it appears as though we still haven’t learnt from the mistakes of the past. We all hear the stories of Australians trying to secure the great Australian dream, to own their home, yet following a succession of interest rate rises, all we seem to hear is how families are facing financial ruin? If it is the great Australian dream to own our own home, why doesn’t’ the government focus more attention on educating young Australians about personal financial management.

So what can we expect in the market? While the market traded up to above 6000 points last week, I didn’t expect it to occur on Monday as this indicates that the volatility in the market is still quite high. Given this, right now I would urge investors to remain cautious about their investments.

So far the market has continued to unfold as I predicted, however, it dropped from Monday’s high by around 8 per cent to a low of 5585.8 yesterday. Despite this, the buyers remained strong driving the index back up to close within 10 points of the open. I still expect the market to be volatile over the next two to three weeks as we move into reporting season. Despite this, I believe the market is likely to rise again over the coming week to challenge the 6000 point level. There is also a high probability that the market will continue to trade up to between 6,200 and 6400 points over the coming weeks, provided momentum remains strong.

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