The Market Wrap + Technical Summary 17-8-12

By Jason Fittler

The market continues to move back to the top of the trading range as investors look for a better yield on their money.

We also saw a positive report come out this week in regard to CBA being one of the world’s largest banks.This should see more investment in our Australian Banking sector.

I have been buying the Australian banks since 2008 and will continue to hold. Sure it would be nice to sell for a profit but given our cost base and current yield in this sector I am holding for the long term.

We also saw QBE come in under expectation sparking a sell off with the stock down 10% on the open last Friday. QBE managed to claw itself back to around the $13 mark on the close.

At present I continue to look for stock which has been oversold due to not meeting expectations as the reporting season rolls on.

In the short-term I expect to see our market move back above the 4400 points mark but I do not have grand expectations beyond this point.

We note that the small caps have not rallied with the big Blue Chips which indicate that investors are looking of safety and income in the Blue Chip companies.

A Bull market rally is still a long way off but the last week has been positive indeed.

Technical Summary

The near-term technical picture suggests it is likely the market will move past 4400 in the next one to two weeks.

We expect that the ASX 200 is at or close to a tipping point which could see the market pull back below 4200 points before moving higher.

I am keeping an eye on a number of medium-term technical issues that are brewing, that suggest a top of some importance may be a few weeks away, and 500 to 100 points higher than current levels.

The medium-term outlook indicates that there is not enough strength in the market right now to kick off a Bull market rally as such we expect that we will see the market continue to trade in the 4400 to 4000 range.

Any negative news would see the market back at 4000 points.

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