It would be fair to say that the rally, which started in August, has terminated.
In the last 33 years, 27 have been positive moving into Christmas.
We are seeing support as expected for the market at 5000 points as investors hedge their position, and get some money back into the market.
Will the market move lower?
Given Christmas is now a week away, I suspect we will not see a strong rally as investors focus on the holidays and reassess where the market is going.
We have seen support in the materials and retail sector however this may have been short covering.
If the market was to move lower then we could see it go to 4700 points but I caution you on trying to pick the bottom as the banking stocks are all yielding above 8% and are down around 10% on their highs two months ago.
Income investors I am sure are watching closely.
This pullback is a great opportunity to start getting some of the spare cash into the market.
The banks are paying dividends this month as such this will add to cash reserves for most investors.
I remain cautious, but long-term I am confident, as such I will be taking this opportunity to add to existing holdings. Short-term I may be wrong.