Share Market Wrap 14th July 06

When it comes to the share market the contrarian view has a great deal of merit, particularly as many people are expecting the bull market to continue in the next year. But let’s face it, if the majority believe the market is bullish then we can safely assume that pretty much everyone has bought in readiness for the rise. If this is the case, then who is left to buy and where will the money come from? Especially now with fuel prices rising, and an expectation of interest rates rises. In reality, this adds up to a pretty uncertain outlook which will surely take its toll on the share market. 

Last week I indicated that we should see more indecision in the market, which has certainly been the case given that it hasn’t really moved strongly in either direction. That said the market is slightly more bearish right now, therefore I am expecting it to move down especially in the early part of the week. The price fall could last for up two weeks, with the market likely to fall to between 5010 and 4960 before we see signs of support and the market rise once again. This current indecision will be causing a considerable amount of angst and frustration for many inexperienced traders, especially those trying to trade highly leveraged products like CFDs and options, and will most likely result in many giving back the profits they have made in the past.