SHARE MARKET IS IN A PRECARIOUS PLACE

OUR market is in a precarious position at the moment.

As of Wednesday, when this is written, the October spike lows formed on the All Ord, ASX/S&P 200 and the SPI Futures had been broken intraday but all three failed to close below the previous low.

What we now have is a new weekly low, which means for a weekly pivot point to be formed, the indices will have to close above this week’s high. In the case of the All Ords this will be 5,823.4.

It is still possible the downtrend may be arrested at these levels as the SPI is still trading positive to the ASX/ S&P 200, which I see as the professional money being optimistic the market is about to turn to the upside.

Because the fall over the past couple of months has been broad based, it casts doubts in my mind about the likelihood of a strong recovery.

Any objective view tells me to stay away from buying anything at the moment, as we are seeing the uptrend line drawn from 2009 being seriously tested.

A break of that line would likely lead to falls to around 4800 to 5000.

This level is an extension of a break of the pattern formed since beginning of 2017 and is also the spike low formed in early 2016.

On the positive side, a reversal to the upside from here could see a move back up to around 6,500, but there will be several serious resistance levels where a rising market may again reverse to the downside.

It is likely any move up though will only be a rebound from an oversold market and give false hope to longer term investors.

On this note it is worth remembering that a stock, or any item for that matter, is only worth what someone will pay for it.

When you look at a stock whose share price has halved, usually the only thing within the company that has changed is the market perception.

A sobering thought when