Market Wrap - Week Ending Friday 18th Jan 08

Last week I wrote “Expect volatile time over the coming months, look for good value stock which have been oversold on panic selling paying good yields and buy with a long term holding strategy.” This was an understatement.  We’ve seen an eight day losing streak in the Australian Market the largest in 26 years. We started the week at a high of 6040 and ending at 5800 being a 4% drop.

This is only half the story.  Friday was indeed a big day on market. On open the market dropped 2.8% which is where it stayed most of the day before rebounding towards the end of the day at down around 1%. We saw good buying by the bulls in the last hour of trading.

The question we’re being asked time and time again… Is this the bottom of the market?  In short the technical charts would indicate that the market should pull up here if not then we could see more significant drops. That said, trying to pick the bottom is a mugs game, what we’re looking for are shares which represent good value at current levels.  My view is in this market there are plenty of opportunities for the serious long term investor to buy good quality blue chip shares which are paying serious dividends and have a good solid income stream. Then hold these with a long term view of 5-10 years.

On Friday we got back to the August 07 lows, this could indicate a bottom, but we need to see where the market moves over the next couple of weeks before we can call it.

Until next week.