Market Likely to Trade Down to Below 6,500 Points
By Dale Gillham |
In the late 70’s and early 80’s we saw the start of the technology boom with Microsoft and Apple beginning to become household names and now 40 years later I believe we are at the start of a new wave of technological innovation. So, where is this innovation going to come from? In my opinion, it will be blockchain technology.
Blockchain to drive technological change
Most people associate blockchain with Bitcoin and other cryptocurrencies, yet this is only a minor part of how blockchain will drive technological change in the future. In simple terms, blockchain provides for the secure, anonymous recording of transactions, which is tamper proof and encrypted data held on multiple servers around the globe.
In fact, I believe blockchain technology will become commonplace in the not-too-distant future, as anything we value can be recorded with blockchain. For example, when purchasing a motor vehicle, you could get a record of every owner, service, accident, insurance claim and more, and be confident that the report is 100 per cent accurate, so you have total peace of mind knowing exactly what you are buying. Sounds like stuff of the future. Well, this exact service has just been launched in the US.
Now think about banking, purchasing a house, getting loans, medical history and the list of applications that blockchain can support, which is why I believe it will explode in the coming years. Even stock exchanges around the world will use the blockchain to record trading activity.
The current COVID-19 pandemic has caused a significant shift in society in many ways and it is highly likely that blockchain will support the changing landscape right now and provide confidence in the security of our data. Therefore, if you are looking for the next Apple or Microsoft to invest in, maybe they are just a small start-up right now or maybe they are not far off listing, either way this space will be fun to watch.
What were the best and worst performing sectors last week?
Financials were the best performing sector up 4.78 per cent followed by Energy up 2.03 per cent and Utilities up 1.04 per cent. The worst performing sectors included Healthcare down 4.46 per cent followed by Materials down 2.76 per cent and Information Technology down 2.3 per cent.
The best performers in the ASX/S&P top 100 stocks included ANZ Bank up 10.20 per cent, Computershare up 9.27 per cent, Bluescope Steel up 9.17 per cent and Stockland up 8.63 per cent. The worst performers included one of last week’s best performers IDP Education, which was down 13.61 per cent followed by Fortescue Metals down 8.34 per cent and Evolution Mining down 8.33 per cent.
What's next for the Australian share market?
The market continued its pattern of closing higher one day only to fall the next, which is the pattern it has been in throughout 2021. While the All-Ordinaries Index was down last Friday, it closed up 0.03 per cent for the week. Given the market closed lower on Friday and has done so for three of the last four weeks, this adds weight to the argument that the market is falling into the low I was expecting a few weeks ago. As I indicated last week, this will be confirmed if the market trades below 6,770 points.
If this occurs, we need to be prepared that the current down move could unfold over the next four to six weeks into mid-April and for the market to trade down to below 6,500 points. Given this, now is not the time to be entering the market, instead you would be better off sitting back and waiting for the next run up, as there are many great stocks that will present excellent buying opportunities in the second half of this year.
For now, good luck and good trading.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online at www.wealthwithin.com.au