ASX 200 To Remain Volatile

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.
 

Content included in this article is not by association necessarily the view of FNArena (see our disclaimer).
 
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.

Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.

Click to view our Glossary of Financial Terms