Strong Australian Dollar holding back the market.
As the below chart indicates we have come back a long way from the lows of 2009, what is also clear is the market is generally trading in a sideways pattern and has been doing so since April 2009.
I expect this will be the case for another 2-3 years.
The big influence on our markets in 2011 is the US. We have seen comments from the Federal Reserve that they intend to leave interest rates low until the recovery is stronger. This has seen the US hit a 3 year high last week; our market has no followed suit as we are currently being held back by the Australian Dollar which is at record highs.
A high dollar is not necessarily a good thing, sure if you want to travel overseas it will be cheaper but if you are working in the mining industry you can expect to see a slow down as export profits get squeezed. Our market tried as it did last week to move higher but could not overcome the dollar. I suspect that this will be the case for some time.
In this market I am maintaining my position in the blue chip, high yielding stocks and am happy to hold some cash as well. The opportunities are few and far in between at present but still there.
This is not a market to be in a rush.
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