The Market Wrap Friday 22-May-2009

By Jason Fittler

Has the pull back started?

We have seen the market pull back this week from the close of last week. This would indicate that we might be seeing the pull back which we have been speaking about for some time. This is not a reason to panic; it is in fact an opportunity to start picking up some under valued shares.

What is also clear from the news flow out of the market this week is that going forward is a stock pickers market. You will do better over the next 1 to 2 years to be invested in direct shares. A number of shares are now truly under valued while others are going to be lucky to stay in the game.

The US has put out a clear message this week that they expect to see the building industry continue to struggle, we can expect to see the same here at home. It is also clear that although the stimulus package both in America and Australia are not expected to do much to stimulate the economy they will not hurt it either.

As you can see in the below chart we look to be forming a trading channel for long term investors look to buy at the bottom of the channel and of traders look for the short term swings. One thing is for sure, there will be plenty of opportunities for those who are patient.