The Market Wrap 25-10-13

  By Jason Fittler

Our market continues to inch forward and is now at its highest level since the market bottom in March 2009.

There appears to be no fear of a correction in the market at present, as investors continue to chase the yield due to the low cash rates.

I remain cautious at this point.  

The market seems to be ignoring the heavy falls on Asian markets.

The banks are trading on price earnings ratios never seen before, and a number of indicators point to the market being overbought.

I expect that any pull back will be small and center around bank earnings which are due to start coming out in early November.

Investors seem comfortable to hold these companies even at these levels, so the likely hood of a large correction is unlikely at his stage.

Margin lending levels have reached a 5-year high. Investors have clearly forgotten the lesson of the GFC.

High margin lending levels leads us to be more cautious as any correction could be larger due to margin calls.

Investing is about finding value in the market, not following a trend.

Right now, our markets are carrying a lot of risk.