The market is continuing to resist a pullback.
As we head into the last quarter we will start to see what results these companies are going to produce for the year. As previously noted most companies will need to have a strong second quarter to support their current price levels.
This quarter will be the time for companies to start getting any bad news out through profit warnings. At present around 60% of the ASX 200 are depending on acceleration in the second half to be able to support their current PE ratios. This is much larger then in previous years.
Any profit warnings will see the company trade lower for a period of a month post the warning. As such we continue to remain cautious on the market and will wait to see how the next quarter plays out.
We continue to see some good value in companies. If they could only go a little lower in price.
We have seen that inflation continues to be higher than the Reserve Bank expected. Any further interest rate cuts are no longer expected. I suspect that we are now more likely to see the next interest rate move up.