Last week was positive on the market with all sectors (except Health) making gains.
The best performance was in the energy sector with materials pulling back late in the week.
Property, Telecom and Financials also moved up.
We are starting to see a border base for investors.
I suspect that investors are now looking to move away from the big banks and into the energy and materials sector. Let’s face it, even BHP and RIO and paying a higher yield than cash at present.
We continue to be cautious on the market as it is currently still in a slow decline.
It does now appear that the earnings cycle of the market has bottomed, this means that we can now be more confident that companies will have less earnings downgrades in the future and in fact we should see (on average) positive earnings growth.
This is not to say that all is well, only that the worst for companies looks to be over.
Before you jump the gun and start buying we need to establish how much the market has already overvalued companies on the back of this news.
At present not all companies look to be overpriced, there is still value to be found. Now is the time for the value investor.