The Market Wrap 4-2-10

By Jason Fittler

Is this the pull back we have been looking for?

For at least three months now we have been looking for the market to pull back. It would appear that this has now happened with the market once again finding support at 4500.

But where to from here, short term still expect to see volatility as the US continues to report along with news flow out of China and Greece.

This is in my book is an opportunity to pick up some more blue chips stocks which are paying a high yield as cheap prices. It is also a good opportunity for short term trades in the material sector, at present my pick in Newcrest, chasing the gold sector.

Long term, the reserve bank kept rates on hold for now, this give us poise as what we are currently seeing is low interest rates, improving earnings in the blue chip companies and overseas companies re-capitalizing their business does lead us into a good year or two in the markets. I do expect to see the market above 5200 sometime this year perhaps as high as 5400.

Downside is the government debt levels, at some point this will pull the economy back, as such I have a cautious 3-5 years view and will continue to monitor the situation closely. The point now however is that there is money to be made to trade the short term with an eye on the Horizon.