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Market Status update

By October 14, 2010November 3rd, 2023Market Commentary, Uncategorized

For those who regularly follow my weekly Gary Stone Journal posts, you would be aware that 4 weeks ago I pointed to two important technical points on the All Ords index which, if broken, would indicate a high probability that the All Ords had finally broken out of a range bound sideways moving market.

The first level of 4683 was a slightly more risky (but potentially higher gain) entry point than the second more conservative level of 4743. For those that took the risk there have been some stellar gains in small to mid cap stocks over the last month or so.

On 30th September the All Ords rose to 4743, found resistance at this exact level then fell back in a text book manner to support at a low of 4615.

From 6th to 11th October 2010, the high for each day was above 4743 and on 2 of these days the market closed above this level, thereby increasing the probability of further rises. Technically this marked the end to what has been a long and sustained 12 month range trading market which started with the peak on 15th October, 2009, although we did not know it at the time! In other words the market is trending again and opportunities abound!

I also outlined in my post on the 17th September 2010, that those sitting on the sidelines waiting for the markets to turn positive could consider this 4743 technical point as a trigger to re-engage the market. It was the conservative level that active investors could wait to be broken to once again seriously consider changing from spectator to player. That time has arrived!

Of course, there are no guarantees that the market will continue to rise so appropriate risk management must be applied. That said, technically it does look like the All Ords will continue to rise to around 4900 before some resistance will be met but the odds are that it will get to the 5000 to 5050 level before a major indecision point is reached again.

One Comment

  • jo says:

    The other risk you have omitted is Legislative Risk, eg Resources Tax and the TLS fiasco. In recent times Government indecision has become one of the greatest risks

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