The market pulled back a little last week with some profit taking.
Figures coming out of the US still indicate that caution is a sensible approach right now.
We must keep in mind that even if the US does pullback our market has not moved up as fast as the US, as such we will not necessarily do the same.
I am still cautious on the market, as it is looking overpriced in some sectors.
As we approach the end of the financial year you could see fund managers starting to take profits to lock in gains. Keep in mind that fund managers get their bonuses based on out performing an index not by making you money.
It is interesting to note the sectors that are pulling back are Materials, Consumer Discretionary, Staples and Financial.
Energy and Utilities are moving to new highs, which indicates that we are starting to see investors move into more defense sectors. It is no guarantee, but this sort of action indicates that the market view is changing as we head towards the end of the year.
It is important to note that the market is up around 5% year to date and May last year also saw the market peak before it fell back in June.