Upfront Investor Share Market Report 25/6/10 Julia Gillard

We now have a new Prime Minister, but is the change akin to shuffling the deck chairs on the Titanic, or is it likely to be good for Australia? I’m all for having a female in the nation’s top job, but it seems to me that politics is more about getting re-elected and making compromises to suit the big end of town, rather than serving the Australian public. From what I see the mining industry with all their power and money have used their considerable influence to decide what should or should not occur.

I am not biased towards Kevin Rudd or Julia Gillard, but Australia needs a leader that does what is right for the country rather than just what will help them win the popularity stakes. The big issue that has rocked the boat is the proposed Resource Rent Tax, which appears to be the right thing for this county if you look past the rhetoric coming from the miners.

From what I can see, the events of this week will not benefit the Australian people as it only increases our distrust of politicians and a political system. It also does nothing in the immediate future to calm the Australian share market.

So what do we expect in the market?

This week the Australian market has been far from impressive, as falls during the past few days have literally wiped out recent gains with our market trading at September 2009 levels. Whilst on the surface this may look give cause for concern, it is quite possible that after trading up for the past four weeks the market is now doing what is actually quite normal.

Let me explain. In a normal market, prices will generally rise over four to six weeks and then fall for one or two weeks before rising again. If this is unfolding we should see the All Ordinaries Index rise over the coming weeks to my target levels. In saying that, whilst activity this week can be considered normal, we know the market has been far from normal over the past two years, and therefore we need to consider the possibility that it may fall away for a further four to six weeks to around 4,000 points. Given this, again I suggest it is wise to set stop losses on your shares to protect capital.

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