Upfront Investor Share Market Report 18/11/09

http://www.youtube.com/watch?v=huEB1pwLuso

The US has just started its reporting season, and executive pays are well and truly in the hot seat especially those in US banks who look set to be paid record bonuses. While I am all for paying bonuses to employees who go above and beyond what they would normally be paid to do, I do not believe the US bank executives should be paid any bonuses given that they were responsible for the biggest meltdown in world markets in nearly 100 years. Furthermore, the US banks really only survived bankruptcy because of the US government handout, so I think the real bonus for these executives is that they are not in jail.

There are arguments for and against large bonuses and salaries for executives, and with the majority of shares traded in the market done by institutions, the average man on the street has very little or no say in what goes on in this area. I believe as the divide grows between those that have and those that have not, we will see more public unrest and much more political debate surrounding these issues. In the next few years, Governments will need to take appropriate action before things get too hot.

So what can we expect in the market?

In my last report, some four weeks ago, I suggested that the Australian market would soon break out of its sideways move, hopefully on the upside to move up to our target level of between 5000 and 5200 points into January or February. I also mentioned that once the high was achieved the All Ordinaries would move down into its yearly low around March 2010.

This week the market hit 4984 points which is its highest level since 26 September 2008, and I still believe that the yearly cycle high will occur around the target levels I mention above. Given this, I expect our market will continue to rise over the next 2 to 4 weeks before falling away into a low in mid to late March.

The fall into the coming yearly low will be the first real test of the March 2009 low, and will tell us a lot about how the market will unfold this year. My expectation is that once the yearly low occurs we will see a very strong rise in the All Ordinaries Index into the middle of this year, but only time will tell.

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