The Market Wrap

Can the market hold out?

By Jason Fittler

There is little doubt that these are interesting times.

Last week I was fully expecting the market to pull back, it seems that most professional investors feel the same way. However, we have seen the market hold steady and continue to move up breaking through 3800 last Friday. This has led us into considering an alternative, the market has bottomed and is now going to head sideways.

So what does this mean for the investor?

If the market has truly bottomed now is a good time to start picking up shares, again make sure you look for good cash flow, low debts and high dividends. Do not expect to see much growth, look to buy on weakness and be prepared to hold the stock for a number of years.

Why the market is not going to continue to move up.

Let me quantify this statement, I do feel that the market could move as high as 4200 but given that the economy is still weak and that there are a number of indicators which are pointing to continued economic weakness we do not expect to see the market have the strength to maintain sustained growth. But given cash is now paying you very little moving into the market for short term income, long term growth makes sense.