Exclusive Digital Market Wrap: Should we rein in the competitive spirit and think carefully about what we wish for?

Australians are known for their competitive spirit, particularly in sport, and so it seems is the case in financial circles.

If the US market is moving up, Australians wonder why isn’t our market doing the same?

If the US consumers are spending more, why aren’t we?

If the US economy shows stronger signs of recovery, why isn’t ours?

Given the recovery underway in the US, where interest rates are now rising, should we be asking.…

Perhaps we ought to rein in the competitive spirit for a moment and think carefully about what we wish for.

Now let’s go back to the before-mentioned point about consumer spending and how it has been rising. What’s really interesting is how those in the financial industry in Australia, seeing the US data improving, immediately look to the same industry or sector here. Why? Because of the potential to profit of course.

However, retail spending in Australia more recently, and particularly through the festive season, has been a disappointment, so it will be interesting to see how the numbers look after the financial year end. However, to find a positive spin for us Aussies, someone looked back to what Australians spent during the Spring Racing Carnival, and guess what? A record level of spending!

So this must mean we’re doing well.

What do we expect in the market?

Last week, the All Ordinaries Index (XAO) pulled back to test support at around 5730 points, before pushing up strongly to around 5937 points. Finally, the market has made another convincing move up.

The next challenge for our market is to break 6000 points and this is looking ever more likely, and firms up our previous target for the market between 6200 and 6400 points.

I had been expecting the market to pull back for a couple of weeks prior to the continuation of the uptrend. With the market now likely to make the next short term low later, the degree of the decline is likely to be sharper but shorter, which is good for investors. That said, the higher and faster the market rises, there is a slight risk of higher volatility during the time for the next yearly low, later in the second half of the year.

In my opinion, this is a much better time to be in the market than just prior to 2015.

Dale Gillham is Chief Analyst at Wealth Within