The Market Wrap 17-5-13

By Jason Fittler

This week was a down week for the market but the real interest lies not with the budget but the earning down grades.

The slowdown in the mining sectors is not new news to the market.

This week we have heard from a number of companies, which contract to the mining sector.

The story is the same as the big miners start to cancel, shelve and postpone projects the services companies, which support the mining sector, have come out with earnings downgrades.

This has produced some good buying opportunities as these companies start to be over sold. Granted the risk on these companies is higher than the banks but then so too is the yield.

This sector will be out of favour for some time but if you are comfortable to hold for the income and have the confidence that these companies are not going broke then you will achieve solid income and good long-term growth.

It reminds me of 2008/2009 when everyone over sold the banks.

The retail sector also took a hit this week again on profit downgrades.

This is a lead indicator that there may be a further pull back in the market. 

May is a time for caution, good time to pick up a bargain in the out of favour companies but make sure you dollar cost average in.