The market came off a high over the past week however the Bulls stepped in to push it back up. (The term ‘extreme greed’ has been thrown around.) Currently it still looks overvalued. But will it drop and if so when?
As we look to the US and what they are doing with QE it is starting to look less likely that we will see a sudden cut in their spending on stimulus. What is more likely to happen is that they will moderate their spending depending on how the economy is traveling at the time.
As such, if the economy is slowing they will increase the bond buying. But if the economy picks up they will slow the bond buying. This indicates that there will be no sudden pull back in the market.
Back in OZ it is looking more like a sideways market will be the most likely outcome.
We have seen the float of Freelancer Ltd list today closing up 220%. This company now has a market value of almost $700 million and is expected to make a profit of $1 million this year. Fundamentally the stock price does not stack up. So be careful not to fall into the trap of chasing these sorts of gains in the future. The winners are the investors who sold out.