Share Market Wrap 21 July 06

The spotlight has been firmly on media stocks in the last week since the government announced reforms to the industry. In my opinion, however, the reforms have sparked an over reaction as people anticipate possible takeovers and mergers. No doubt there will be some opportunities that will emerge, but I think these will be fewer than anticipated and may not be as spectacular as some might believe. The announcement has been a long time coming and very much expected, therefore the major players set to reap the rewards have had a long time to plan their attack and it is unlikely that Murdock or Packer would over pay for anything. 

As expected, the market fell away this week although I will say that the heavy fall on Friday 14 July surprised me. This recent fall has been a little faster in time and slightly more in price than I had anticipated, therefore my thoughts on the direction of the market for the remainder of this month have changed. While I believe the increased volatility in the market will continue until the end of July, it appears that our market has had its short term low and will now travel up for the remainder of the month and possibly a little longer. Longer term I believe the market is bearish and therefore unlikely to break above 5220 points before falling away again. As each week passes I am getting more confident in calling an end to the long term bull market but only time will tell.