Correction For The ASX 200?

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By Michael Gable 

We got that short term bounce in resource stocks last week. Unfortunately it was a very short term bounce. The spectacular run ended early and although there was always a chance that the big miners BHP Billiton ((BHP)) and Rio Tinto ((RIO)) would retest their earlier lows, it appears as though it will happen sooner now rather than later. Yesterday’s GDP figure out of China was disappointing of course, but they have room to stimulate from a sustainable base. Iron Ore has rallied the last week and copper appears to be finding lows, with events at RIO’s Utah mine and strikes in Chile putting pressure on the supply chain.

So while the short term trade in the big miners was short lived, they are clearly getting towards their lows now and will present the buying opportunity of the year at some point over the next few weeks.

Events in Cyprus and North Korea have rattled markets, and now we have this terrorist act in Boston. So the negative sentiment that I have been a little concerned about the last several weeks may continue to grow and will continue to drive markets lower through to May.

ASX 200

After hitting my 4880 target, I was looking last week for the market to rally to 5000 – 5050. Last week saw the market reach an intraday high of 5023 which is almost an exact 50% retracement of the previous fall. This level usually offers strong resistance. Having reached that level, the market yesterday was sold off quite strongly. We have been spot on so far so we are now likely heading to the next level down. I have been anticipating the market to then fall to 4750, with 4570 a worst case scenario. Given the surprising severity of yesterday’s move, I think that these types of falls are looking more and more probable by the day where the market may find a low point in early June.
 

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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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