Market Wrap Friday 11/02/2011

Great run on the market.

By Jason Fittler

Over the last couple of weeks while we have been busy with cyclone Yasi, the market made some good ground. Moving up from the 4720 to 4900 which is a 4% gain.

But what is the inside story?

If you take a look at the small and mid cap stock you will notice that these have not been moving up with the market. See the below charts, these sectors have moved sideways over the past couple of weeks. We also note that advanced decline line is also trending down.

What this means is that all of the heavy lifting in the market at present is being done by only a few of the large blue chip stock such as the resources and the bank stocks. This is not uncommon but it does also indicate that the market is nearing the end of this rally.

What to do?

Be cautious on buying the big blue chips, banks look a little on the high side and I am happy to sit and wait for a lower price. The money should roll over out of the blue chips causing a fall in the market.

I do not expect that this will be much more then 4-5% as such holding stocks is the best strategy.

I will be looking to buy the gold and energy stocks on weakness, also increasing exposure to the US as I expect to see more money start to move into this sector.

Best plays on this at present are Platinum and Premium Investors.

If you would like more information please call me on (07) 4771 4577.