The Market Wrap Friday 5-June-2009

By Jason Fittler

Take a look at the last three bars on this chart.

Last week was a lot of fun and a lot happened.

GDP up by 0.4% or was it? Seem to some irregularities in the way GDP was calculated. Some political maneuvering I suspect. However the facts are the facts, we are in a recession no doubt about it.

Interest rates left on hold, I still suspect that we could see another 0.5% drop. Perhaps later in the year when housing sales slow due to the removal of the first home owners grant.

RIO oust the Chinese and back in bed with BHP. It’s also offering a 21 for 40 rights issue at $28.20. Another great arbitrage opportunity for RIO shares holders and those who get in at the right price.

Back to the last three bars above, last week I was looking for a sign as to where the market is going from here. Last Wednesday we saw the market move to new highs for this Bear market rally, only to fall sharply on Thursday.

Friday is important (the last bar on the chart), as you can see the market retested the highs of Wednesday before falling back to close lower. This indicates some bear action in my book now it might not be a big move down but certainly I think the risk is still to the down side.

I remain cautious in this market but taking opportunities when they come available.