The Market Wrap 12-10-15

By Jason Fittler

The last couple of months have been volatile for the market.  

The below ASX 200 index chart shows the fall from 5900 points to a low of 4900 points. This a total drop of 16% in 5 months.   

But keep in mind the gains of the prior couple of years still put the share market as the top growth sector.

Last week the market put in a good rally with interest left on hold. But is this enough to sustain a rally back to 5900. 

Let’s look at the main issues. China is slowing which means less demand for our resources, so our exchange rate has fallen to the lows of $0.70 per US Dollar. 

We also note that the resources especially coal seam gas sector is being hit hard in the US as Oil prices are also at historic lows. This has affected the US bond market affecting the volatility in the US that affects us in Australia. 

At present worse case is the market slipping back to 4000 points, the bottom line in above chart. 

However support looks solid at current levels, and Australian companies are reporting as expected. 

Some companies look cheap. 

I continue to hold and look for buying opportunities such as the Origin rights issue currently in play. Companies looking to raise money will be doing it cheap and provide opportunities for easy gains.