It was another tough week on the market with the ASX 200 losing 0.5% this week.
The market closed down just below 5000 points at 4966 for the week.
The issue is has the market hit it short-term peak and will we see more downside over the coming weeks.
Certainly for the big banks, which have been the market darlings for the past 6 months the upside targets have been reached.
Any further buying in the top 20 is as far as I am concerned speculation on a quick economic recovery and not sensible investing.
We have started to see a number of the out of favour company’s bottom and investors start to buy as they look for value elsewhere.
I am still expecting that the market will pull back in the coming weeks/months but this will mostly be due to profit taking in the top twenty companies.
As mentioned last week we are now chasing high yielding stocks, which will also provide good growth over the median-term.
This means that the yield will not be quite as high as the banks, but the upside growth will offset this.
The banks are now overvalued and as such the risk is now to the downside.
Capital losses in the top twenty will most likely offset the benefit of the high yield.