Since December we have seen a strong, Bull market rally, with the market hitting a new high since the GFC.
The question now is will it continue to move up or start to pull back.
As we have been saying all along, the rally has been mainly concentrated in the top 20 companies and the rest of the market has not seen the same sort of growth.
I remain very cautious on the market. Until we start to see money rotate out of the top 20 and into the mid and small caps sector I am not prepared to call this a Bull market just yet. As such, I will continue to hold some cash on the sidelines.
At present, I hold around 20% in cash which means that 80% is exposed to the gains of the market thus far.
There is some opportunity cost in holding cash but I consider this to be insurance or a hedge against the market pulling back.
I caution investors on being too eager to get in just yet.
Initially we were expecting the market to pull back to 4000 points, this seems unlikely at this point.
We will continue to watch the market and look for a safe point of entry.