The Market Wrap 22-11-13

By Jason Fittler

We are starting to see weakness in the market as a whole.

However, the ASX 200 is not a true indicator or what is really going on out there.

If you look at the micro cap companies and the micro cap resources companies you will see a clear pattern that the market is still very much a Bear market.

The micro cap companies have closed negative for the past 29 days losing around 100 point or 8% since the start of November. When we compare a small mining company like Pan Australia which has fallen 23% since the start of November compared to BHP which has remained relatively flat you start to see the picture.

Investors are chasing the big blue chip companies for yield and safety.

This is not a Bull market it is a factor of the cash rate being so low.

However, this does not mean that there will be a crash, as investors either need to be worried about capital loss or have a better opportunity for their money. At present this is not the case.

Gold has also suffered a steady decline this year, which again points to an odd market. In Bear markets investors usually find safety in Gold.

My view is that the market is going through a transition from a Bear market to a Bull market. You only need to take a look at the number of floats over the next month to see times are changing.