Re: XAO Analysis
I agree it could go either way.. and it's very similar to last year.
The only reason I say 'now rather than later' is that the catalysts for such a move, such as high oil prices, high dollar (hurting exporters, while yes commodities also going up, reducing the effect a little), worries over in the US over housing, and Chinese starting to get quite worried about over-inflation, are more present now.
If they were passed over, then surely that would give greater reason for a larger correction within the next 12 months which would be worse news, because the problems are still underlying.. A break under 6200 in the XAO would may still be less than 5%, and give room for further rises this year. For it to get truly nasty there would have to be a lot of continuing (very) negative news over subsequent days/weeks to cause it to form a downward trend. No local news to suggest that at the moment.
Also a constantly oscillating index may not encourage further investment, and wealth into the stock market to drive things further when some people already have doubts forming. While you can view the current moves as consolidation (positive), you can also see it equally as uncertainty (negative). Looks more like the later to me, I would have thought consolidation would be a lot flatter (e.g. mid-July 06 as you've shown).
This article here suggests such a correction is both overdue and probably welcome: http://www.theaustralian.news.com.au/story/0,20867,22028586-5001942,00.html
I agree it could go either way.. and it's very similar to last year.
The only reason I say 'now rather than later' is that the catalysts for such a move, such as high oil prices, high dollar (hurting exporters, while yes commodities also going up, reducing the effect a little), worries over in the US over housing, and Chinese starting to get quite worried about over-inflation, are more present now.
If they were passed over, then surely that would give greater reason for a larger correction within the next 12 months which would be worse news, because the problems are still underlying.. A break under 6200 in the XAO would may still be less than 5%, and give room for further rises this year. For it to get truly nasty there would have to be a lot of continuing (very) negative news over subsequent days/weeks to cause it to form a downward trend. No local news to suggest that at the moment.
Also a constantly oscillating index may not encourage further investment, and wealth into the stock market to drive things further when some people already have doubts forming. While you can view the current moves as consolidation (positive), you can also see it equally as uncertainty (negative). Looks more like the later to me, I would have thought consolidation would be a lot flatter (e.g. mid-July 06 as you've shown).
This article here suggests such a correction is both overdue and probably welcome: http://www.theaustralian.news.com.au/story/0,20867,22028586-5001942,00.html