Australian Investment Blog

The ASX200 is roaring into Christmas but remember our 2016 forecast! Welcome to what looks set to be a scorcher of a Friday here in Sydney! This is a short report today because, overall, it appears to be time to sit back and enjoy the ride. Overview The ASX200 has experienced a stunning week so far rallying 264 points (5.3%) to close at 5242 yesterday - see chart 1. The statistics Market Matters has been quoting almost daily over the last week or so look to have worked perfectly, i.e. the average correction in November over the last 5 years is 7.1% and in 2015 it has been 7.5% (to-date). We are now entering the extremely strong seasonal period for equities which usually lasts until late December / early January. In mid-December, 3 of the big 4 banks pay their chunky dividends which is usually a positive for equities as some of this money is likely to find its way back into the market. The local market looks likely to test the 5400 resistance BUT if the Christmas cheer really kicks in, the 5700 area would not surprise. Market Matters remains confident with its long-standing prediction that the S&P500 will reach all-time highs in the 2200-2300 region in the coming months - see chart 2. Importantly now with the market 324 points (6.6%) above recent lows the risk reward for equities is clearly not as attractive as previously even though markets are technically bullish. Hopefully subscribers have followed Market Matters’ general market alerts over recent months and are already fully / mostly invested in the market. Turning to the Market So let’s explore the question “Would you be a seller / buyer now”? Importantly, technical sell areas are approaching for some of Market Matters’ portfolio; initial target areas are highlighted below: 1. Ansell (ANN) $21.93 - Initial target $23 and then $25.