Where will the ASX bottom?
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How much more will the ASX and the leading stocks in the Australian market fall? Well this is the question virtually ever investor would love to have an answer for but one thing could be said the market will head lower in the near term.
To presume the market has bottomed would be incorrect, the S&P ASX200 index is at 3402.4 while the broader All Ordinaries index is 3353.
Many factors are likely to impact the market in the near term the least of them being global markets which have fallen more heavily in recent times than the Australian market. The Australian market has held up relatively well but that has created a false expectation for investors as some have re-entered the market.
The sharemarket is likely to head lower and 3000 is not unrealistic in the months ahead as investors realise the market will not bounce back to it’s highs anytime soon. The market will need to find it’s own levels based on forward earnings potential and an increasingly jaded investors who are feeling poor from the lose of value to their investments.
Just as in boom times investors feel wealthy from their rising portfolios they become greater consumers and splash out, the same happens in reverse when the economy is tanking and investors are losing money, they stop spending.
The next few months will test the resolve of investors and I suspect we will see a low on the S&P 200 around 2800 most likely during 2009. I don’t necessarily think like we will see a solid recovery in late 2009 like many analysts are forecasting. 2009 will be a tough year for investors.
Australian Bank Watch will increase it’s focus on the sharemarket in the coming months to monitor movements and trends that may affect the economy and sharemarket in 2009.
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