It's anywhere from here

Published in The Daily Telegraph, August 2007 by Rhys Haynes and Trevor Chappell

Market expected to open higher but it still can't shake the blues.

The Australian stock market should open higher today but analysts are warning there could be more dramatic falls in stocks in coming weeks.

The US markets lifted about 1per cent on Friday night, Australian time, suggesting the Aussie stocks will follow with a healthy start today.

The Dow Jones industrial average rose 142.99 points to 13,378.87 and the S&P500 Index lifted 16.87 to 1479.37.

The Nasdaq Composite Index added 34.99 points to 2576.69.

US markets responded positively to data showing a rise of new house sales and orders for durable goods in July.

I expect the Australian stock market to open higher, with Friday night futures trading suggesting gains of up to 100 points, following a solid performance on Wall Street and global commodity markets,'' MFS Investment Management Ltd chief executive officer Guy Hutchings said.

Mr Hutchings said he believed investors would welcome relative calm returning to global markets at a time when Australian company earnings remained strong and credit market gloom emanating from the US appeared to be settling.

Other analysts, however, warned investors to be cautious due to the current volatility in the market.

Even though the market rose strongly [last week], we are yet to confirm it has stopped falling,'' Wealth Within analyst Dale Gillham said.

This is obviously very important if you are considering any new positions in the market; therefore caution needs to be exercised as there is still a high probability that the market will fall further.

It is possible that what we have seen over the last few weeks is the start of the fall into the low which, if correct, means the All Ordinaries could move down to about 5000 points over several months.

For now it is better to sit back and take a wait-and-see attitude until we can confirm the medium to longer term direction of the market.''

On the Australian market stocks closed lower on Friday, ending a four-day rally that rescued the market from its large sell-offs of the previous week.
The benchmark S&P/ASX200 index closed 71.2 points lower at 6088.5, and the all ordinaries fell 62.5 points to 6087.2.

On the economic front, data will be released this week on Australian new home sales, business investment, retail sales and the current account and trade balance.