The Market Wrap Friday 11-6-10

By Jason Fittler

4700 looking more likely.

The market recovered on Friday to close back above 4500, this should be the start of a recovery rally which we expect will peak around 4700. We still believe that fair value for this market is 5200 but I do not expect to see the market reach this level on the current rally.

The volatility is still in the market place so do not become complacent, it would not be unexpected to see the market fall back below 4000 points in an effort to retest the March 2009 lows. Technically we could see the market fall to 3700 in the coming months.

So what should you do?

For long term investors continue to hold your quality blue chip stock and collect those dividends. This Bear market will be over in a year or so and you will see the market start trading back towards fair value of 5200 or above.

Short term investors should look to short the market around 4700 either through selling out shares or through options positions.

For those still holding cash, make sure you buy heavy into any dips as this may be your last chance.

The good news is that we are almost out the of the Bear market and in a couple of years this will all be a distant memory but the money made will not.

PS. When you need professional advice call us, (07) 4771 4577.