Last week I suggested that the All Ordinaries Index was likely at a support level. In the wake of the financial fiasco over the course of last week, the market has fallen even further to a new support level of 4620 points. I do not expect this market to fall further again. In fact its 2:20pm and I think over the next 1.5 hours we are going to see the ASX fall back to its morning lows before we see bargain hunters to move in. So I see the last half hour as a time to buy in the Australian market.I have considerable confidence that this is not the end of this 'super cycle', though I do believe the US will have to raise interest rates to increase savings. We are looking at a higher interest rate environment, we are looking at more subdued levels of economic activity, but there is not a huge overhang of capacity, so I see a full recovery within a few years, and likely a new rally being built within a year. I don't see any reason why people should not start buying.
It will be interesting to see how the market closes today. Its not good for the market to close at its low. It shows the Australian market is uncertain and looking to the US market for direction. I will be buying before the close because there will not be an opportunity when the US market shows its bottom tomorrow. I already identified my target stocks last week.
Andrew Sheldon www.sheldonthinks.com
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