Market Wrap - Week Ending Friday 1st Feb 08

By Jason Fittler 

Market%20Wrap%201-2-08.gifWhat a difference a week can make, this time last week the market was down and there was a lot of uncertainty about where the market would go. When we take a look at the chart we can see that we now have some answers.

Last week our market retested the lows pulling up at the August 2007 lows before recovering; this provides us with some comfort that in the short term our market has found a bottom. Now is a good time to start picking up some good quality stocks at low prices but we still need to be careful as to what we buy.

I’m only looking at shares which have a high free cash flow, low level of debt, good dividends and solid business platform. I’m staying away from anything which has any financial engineering.

We also saw the Feds cut interest rates, in total they cut 1.25%, this is another strong indicator that Feds will continue to cut rates to support the market. The US is still in the middle of their reporting period and we’ve seen some ugly results to date… I would expect more of this. In Australia we will start reporting in earnest this week with BHP reporting on the 6th of February, BHP also needs to finalise its bid for RIO in the same date. As such you can expect volatility to remain in the market for some time yet.

Until next week.