The Market Wrap

Will the market reach 3800? No.

By Jason Fittler

Last week we finally saw the market start to come off. We have been saying for over a week that the market looked like it had run too far and needed to cool off. In my view it is simply some profit taking going and the market will continue to move up over the medium term.

In the below chart the bottom black line is my lowest target for the market in this pull back, this is at 3350. It may only go as low as 3500. Either way we will keep an eye on the market over the coming week to determine when is the best time to buy.

I believe now will be a good opportunity to buy into the market to take advantage of a further rally which I suspect will go as high as 4000. We may look to take some profits at that level depending on what is happening then.

The other big news was the Government looking to build the $43 Billion fiber to the node contract themselves. There is a lot of debate about if the Government will have the capabilities to do this, personally I do not care. What is important to me is that this is a positive for Telstra, it will take at least 8 years if at all, for the Government to build this network. During this time Telstra will remain the dominate player, given that it is paying a 8% fully franked dividend this is a must in every portfolio.