The new Australian share market’s all-time high set last week has significant ramifications for investors who can now move forward with certainty and confidence, a chief analyst has said.
Wealth Within’s chief analyst, Dale Gillham, said that the market’s positioning means a crash is “definitely not on the horizon at this point in time”, despite alarmists who had been “ringing the bell about a potential market crash once the All Ords pushes through its all-time”.
Mr Gillham flagged that it has been 4,284 days since the Australian share market last reached an all-time high, which last occurred on 1 November 2007.
“We need to remember this marks the longest stretch in time for the Australian market to create a new high, so breaking this milestone now means investors have more certainty and confidence, and I believe there is further upside,” he forecast.
So what will the Australian share market do now?
Now that the market is “trading in blue sky”, Mr Gillham said he believes the Australian market will trade up strongly for a few weeks with a top end target of around 7,200.
Still expecting the market to be searching for its yearly high, the financial services analyst said this will then pull back into the yearly low.
His prediction is “that the market will continue to rise through to late August or early September before falling into a low late September or October, with the decline likely to be around eight to 15 per cent from the high”.
For now, investors who are buying over the medium to longer term should expect a small dip in stocks before the end of the year, with Mr Gillham clarifying that this drop “will be short-lived”.
Where should investors be looking for opportunities?
“The best sectors for opportunities I believe will be financials, energy and materials,” according to the chief analyst.
Mr Gillham noted energy as being the best sector last week, up around 4 per cent, despite it being “the worst performer this year”, and so this may present opportunities moving forward.
He said it was “surprising” that materials was the worst-performing sector over the same period, ending slightly in the red, and harbouring the week’s top five worst performers.
For the financial sector, the chief analyst commented that while doom and gloom has surrounded the sector over the past few years, “it got a strong lift after the dust settled from the fallout of the royal commission”.
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