A door is about to open

Published in the Geelong Advertiser, June 2013 by Dale Gillham 

The saying "when one door closes another opens" could not be more true when it comes to the market, as there will always be opportunities to profit regardless of whether a financial instrument, market or stock is falling or rising.

With the right knowledge, it is relatively easy to find where to invest for the best return, but unfortunately many would-be traders and investors get caught up in the emotions of the market, which leads to poor decision-making.

However, the best combatant to fear is knowledge, and if you educate yourself in how to safely invest in the share market then logic, not emotion, will allow you to see the opportunities and give you real control over your investments.

We have seen in recent weeks how fear can affect the value of the Australian dollar.

About 40 per cent of the capital in our market is held by international investors and if there is an expectation of a fall in the value of the Australian dollar this puts downward pressure on our market temporarily.

However, the good news is that many quality stocks are now becoming much more attractive and therefore it appears the door of opportunity is about to open.

So, what do we expect in the market? 

The Australian market continued to move down this week, to below 4800 points and into my zone of support between 4750 and 4800 points, with the decline representing a fall of around 9 per cent for the All Ordinaries Index over three weeks.

Ideally, I like to see a decline occur over one to four weeks before the market turns back up, and therefore, I will be looking for the market to rise from the end of next week or for the market to move sideways during trade the following week.

Given that a rise back to the 4900 and 5000 point levels will be very important in confirming the probability of a continuation of the overall upward trend on the market, I will also be watching for a retest of this zone when a rebound occurs.

When this next low is confirmed it will be possible to determine the most probable scenarios as to how the market will unfold moving into the second half of 2013.

In the meantime, investors need to be patient and remember that falls of this degree are common.

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