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S&P/ASX 200 trades lower but may have more steam left

The ASX 200 could rise over the next two weeks breaking through the all-time high before falling away for one to two weeks into mid to late July.

bull and bear
Some experts are saying that the market is over heated

S&P/ASX 200 (INDEXASX:XJO) may end its positive run today with the index trading 0.64% down to 6644 points at 2:13 pm.

Wealth Within chief analyst Dale Gillham feels the market is bullish and will remain bullish in the medium term with his target being 6900 to 7400 points.

Gillham added: “My position on the Australian stock market has not changed, despite many other experts claiming that the market is over heated and, therefore, is expected to see it fall away strongly.

“In the short term, I believe the ASX 200 will rise over the next two weeks breaking through the all-time high before falling away for one to two weeks into mid to late July.

“The sectors I like moving forward include Energy, Financials, Materials and Healthcare. There are also many stocks in the top 50 within these sectors that looking good right now.”

Investors prefer stocks over cash after RBA interest rate cut: Dale Gillham

Right now many are asking why the Australian stock market has been so bullish in recent months and if it will continue to rise next year.

There are a range of different factors that contribute to the direction of the market and for the most part it reflects our confidence in business and the economy.

If confidence is high or increasing the stock market will rise, which creates momentum. How fast or slow the momentum is will be determined by economic factors. The most recent of these being the election outcome and the subsequent RBA rate cut. In my previous reports, I communicated that the stock market was bullish prior to the election, and so the surprise election outcome increased the bullish momentum.

With the RBA interest rate cut, we know that as the cash rate drops so do returns on cash investments. Therefore, with the cash rate being below inflation, it makes sense that investors would exit cash investments in favour of stocks to achieve a higher return together with the opportunity to also receive capital gains as the assets rise.

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