Not Yet Time To Buy

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By Michael Gable 

Our market (200) dropped 3% last week, and it appears as though yesterday’s announcement on Cyprus was enough to see some buying return. However, it seemed quite lacklustre by the end of the day, and I am sure there aren’t many looking to pick up large positions before the 4 day weekend – not with this EU cloud hanging over us.

On a positive note though, the performance of the Dow is an encouraging sign for the Aussie market on a medium-longer term basis. Low interest rates and cost cutting have seen some great returns to profitability for US companies. Imagine seeing the same effect on Australian stocks. Because of the interest rate cuts here starting to filter through the economy now, I expect that the second half of this year should see some very healthy margins being reported from industrial stocks that have done well to cut costs.

In the meantime, this weakness continues to prompt us to sit on the sidelines a little longer in order to pick up these companies at cheaper levels. And on that note, I spoke about weakness in BHP Billiton ((BHP)) and Rio Tinto ((RIO)) about a month ago with price targets of $35 and $60 respectively. They have overshot those levels, but we are getting much closer to being a position to buy these stocks now. Hopefully within the next week or two I get a reversal signal.

ASX 200

Looking at the charts, the market continues to correct back as predicted. We can see that yesterday’s high failed to overlap last week’s swing low (indicated by the top dotted line). I have had another look at my targets in light of this so I have support down at 4880, with the next level down at 4570.
 

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Visit Michael Gable's website at  www.michaelgable.com.au/.

After leaving Macquarie Bank's Securities Group in 2008 after many years of service, Michael has gained a highly regarded reputation in the financial services industry. As a Private Client Adviser with Novus Capital, Michael has become a popular live commentator and analyst for Sky News Business Channel’s “Your Money, Your Call” program. He is also the author of the weekly stock market report “The Dynamic Investor”.

Michael assists investors to achieve their goals by providing advice ranging from short term trading to longer term portfolio management.

Michael deals in all ASX listed securities and specialises in covered call writing to help long term investors protect their share portfolios and generate additional income.

Michael is RG146 Accredited and holds the following formal qualifications:

• Bachelor of Engineering, Hons. (University of Sydney) 
• Bachelor of Commerce (University of Sydney) 
• Diploma of Mortgage Lending (Finsia) 
• Diploma of Financial Services [Financial Planning] (Finsia) 
• Completion of ASX Accredited Derivatives Adviser Levels 1 & 2

Disclaimer

Michael Gable is an Authorised Representative (Rep. No. 376892) of Novus Capital Limited AFSL 238168 ACN 006 711 995. Michael Gable and Novus Capital Limited, their associates and respective Directors and staff each declare that they, from time to time, may hold interests in securities and/or earn brokerage, fees, interest, or other benefits from products and services mentioned in this website. This website may contain unsolicited general information, without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you must consider the appropriateness of the information in this website or the Product Disclosure Statement (PDS) or Financial Services Guide (FSG), having regard to your objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance. Michael Gable and Novus Capital Limited believes that any information or advice (including any securities recommendation) contained in this website is accurate when issued but does not warrant its accuracy or reliability. Michael Gable and Novus Capital Limited are not obliged to update you if the information or its advice changes. Michael Gable and Novus Capital Limited and each of their respective officers, agents and employees exclude to the full extent permitted by law, all liability of any kind, in negligence, contract, under fiduciary duties or otherwise, for any loss or damage, whether direct, indirect, consequential or otherwise, whether foreseeable or not, to the extent arising from or in connection with this website.

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