The Market Wrap 12-12-14

By Jason Fittler 

In the past 2 year the ASX 200 has hit 5100 point.

Over the past 3 months it has tried twice to get back to 5100 points.

But right now it appears that everything is in favour of the market going lower.

How low is the question and what will stop it?

In short:

Material prices down,

Oil prices low,

The Australia Dollar low,

A budget, which is not allowing for government spending to push up jobs (unemployment and under employment at 15%),

Red tape,

High awards and,

No incentive for business to take a risk. 

I am confident that we will continue to see our market pull back as the economy will continue to struggle. 

But how low?

If the market falls through 5100 points the next resistance level is 4600. But keep in mind that this is only a fall in market price not in the value of the market.

Individual companies have already taken steps on the expectation of less revenue. They have cut costs. Mainly in the form of wages so that their cost structure can deal with the slow economy. 

This is a period to look for well-priced companies and buy for a long-term hold.

Continue to focus on income as opposed to short-term fluctuations in value.