Shareswatch Australia

So far this year the Australian stock market had managed to edge slowly upwards and the All Ordinaries Index appears poised to settle above 4400 during the next week or so. Although the risks of a major Eurozone economic implosion appear to be fading, the signs are that the economy in China continues to slow and it appears the U.S. economy is still struggling. The situation in China in particular is likely to have a major impact on where the Australian stock market heads next over the following few months.

The ASX All Ordinaries Index and S&P/ASX 200 Index finished much lower than I expected in 2011, so this makes me somewhat reluctant to go on record and make an Australian stock market forecast for 2012. However the process of looking at the various economic data and trying to guess where the market will end is a useful one, so foolishly I will outline once again my Australian stock market forecast for the year ahead.

As each week passes the moans of struggling businesses grow louder and finally it appears that the Reserve Bank of Australia (RBA) board members have woken up to the fact that the economy has been sliding backwards since late 2010. Once again the RBA had made a tactical blunder and raised rates too high just as they did as the global financial crisis was unfolding back in late 2007.

Another week is over and the ASX All Ordinaries Index has finished just above 4600 and the S&P/ASX Index just below 4600.  Here we are again at the bottom end of a fairly narrow trading range in which the Australian stock market has traded within for more than a year. It’s enough to make you sleepy.

Today the Australian stock market is slipping back towards 4500 as once again investors are becoming concerned that the feeble global economic recovery is faltering. But rather than focus on the short term movement of the stock market let’s once again look at the 52 week share prices of some commonly held Australian stocks.

Now that it appears we are in the midst of the long awaited stock market correction it seems an ideal time to check how the 52 week stock prices have been tracking for a number of ASX listed stocks as this may tell us if the rally of the last 7 months is running out of steam.

One year ago I put together a fictional portfolio of stocks by simply using a random number generator and a list of shares that makes up the S&P/ASX 200 Index. Now 12 months later it is time to look at how these stocks have performed and see if they can tell us anything about the overall state of the Australian stock market.

In September last year I looked at the 52 week share price highs and lows for a range of well know stocks trading on the ASX. As luck would have it, a few days later Lehman Brothers went under and stock markets around the world tumbled. But now that the dust has settled (I hope), it might be interesting to go back and look at these companies and see what has happened to their stock prices since September 2008.