We have been calling for a pullback in the market for a couple of weeks now. On Friday we saw a decisive move by the market, pushing below the previous lows of this current rally.
Keep in mind that the market movements are echoes of the mindset of the major investors in the market.
The major players worst fear is being left holding the stock everyone else is selling. We are starting to see some serious selling as the players look to protect their profits made in February.
Let’s look at the fundamentals the current market. Prices of companies have outpaced earnings. Unemployment is high 6% on government figures and over 12% if you look at the Roy Morgan figures. I hold the later view. Retail sales are down across the board. Infrastructure projects are promised but are still some time away.
I expect that the earnings for companies will slowly improve or at least hold their own in the coming year.
The market is looking fully priced.
Any pullback is an opportunity to buy into the long-term market.
It is always darkest before dawn and for the long-term investor a new dawn in only a year or two away.