The Market Wrap + Technical Summary 14-9-12

By Jason Fittler

Quote of the Week - "Even if you’re on the right track, you’ll get run over if you just sit there." — Will Rogers

Last week the market reached the 4400 points. As you can see in the below chart the market has reached this level four times in the past year.

This time we expect that the market will push through but not far. As mentioned last week we are expecting to see the market pull back.

In our view the market is getting ready move out of this Bear market over the coming two years. To do this we expect to see a major contract one last time to form a bottom from where the next Bull market will start.

This of course will become common knowledge about two years after it happens.

At present we are still looking to buy income, at these levels our focus is on Hybrid securities which do not provide any growth but have a high level of income. They also have less volatility as such will be left unaffected by any market pull back.

We are also holding cash as I believe that the last opportunity to buy quality companies cheap will happen in the coming 3–6 months as such I intend to take full advantage of this opportunity.

Buying when everyone else is selling is the only way a retail investor can beat the market.

Technical Summary

I expect the ASX 200 to hit fresh new rally highs – 4403 is my minimum expectation although ideally we should move past 4448 points.

Such strength, if it materialises, will be a good place to take profits since the technical evidence warns of a looming correction from these levels.

I expect a pullback towards or below 4000 over the next four weeks, where we will start to accumulate stocks again.

For more information on the above please contact us on 07 4771 4577.