Share Market Wrap 24th Nov 06

This week has seen increased volatility in the market with the All Ords falling 88.5 points on Monday only to rise back once again over the last few days. So, is this something we should be concerned with? Not really, because I believe the volatility is being driven by Telstra with the float of T3 and the takeover announcement of Qantas.

Given that Telstra and Qantas are two of the biggest companies on our exchange, they tend to influence the movements in the All Ords. Following the T3 listing on Monday Telstra fell by 3.2% whilst the All Ords fell 1.63%. Since then Telstra has risen 3.5% whilst the All Ords has only risen 2.32% with 1.5% of that rise occurring on Wednesday. Qantas rose 14.94% following the takeover announcement on Wednesday and Telstra rose 2.47%. That said, once the dust settles on these two shares, which should be any day now, the All Ordinaries index will return to more normal trading as I have been expecting.  

So what’s happening on the market?

In previous reports I indicated that the market should peak between the 15th and 20th of October and then fall for 4 weeks into a low between the 15th and 20th of November. However, because the market peaked later than expected the time period for the low needs to be extended.

We have just entered week 23 in the current move, and I don’t believe the rise this week signals an end to the down move I have been expecting given that the market hasn’t fallen enough in either price or time to confirm the low. Normally the market will fall for 3 to 5 weeks into a low and we are currently only in week 2 of the current fall, therefore we need to be prepared that the market may continue to fall for at least another 1 to 3 weeks with my target for the fall likely to occur between 5200 and 5000 points.