Technicals | Jun 25 2013
This story features AMP LIMITED. For more info SHARE ANALYSIS: AMP
By Michael Gable
Our market reacted negatively to comments by Ben Bernanke last week but to me it seems a bit of an overreaction for now. The US will only taper back QE if the economy is able to pick up the slack, and they will step back in to maintain confidence if need be. Everyone is so negative on the effects of tapering QE that we could end up with a positive surprise. Remember how the markets reacted to the downgrade in the US credit rating? After a short period of time they rallied and never looked back. The dark horse appears to be the tightening of credit conditions in China during the last few days. If it wasn’t for that issue, I am sure our market would have got over the QE fears already by now. The effects cannot be understated but surely from what we have learned in the last few years the Chinese government won’t allow a harmful situation to develop in the credit markets?
A couple of company announcements yesterday couldn’t have been more in contrast with each other. Investors punished AMP ((AMP)) for the downgrade to earnings and the threat to the dividend, and short sellers scrambled to cover positions in Metcash ((MTS)) as their results came in better than expected. While I expect AMP to be punished further, Metcash should now start to strengthen over time.
ASX 200
The rally off the low in the market was over much sooner than I expected. We are probably going to move down to the next level of support before bouncing back, which I believe is 4600-4615. Given the recent rally and subsequent failure, I think the most likely price action now in the market will result in a few weeks of volatile movements with a 200-300 point range.
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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
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