The Market Wrap 5-4-14

 by Jason Fittler

“Sell in May and go away, don’t come back until St Leger Day”

In 2010, 2011, 2012 and 2013 the above saying has held true with the market topping during those years in either late April or early May and bottoming one to two months later.

Will it happen again in 2014?  Time will tell, but the signs are not the best. 

If we look at Telstra, Woolworths, Wesfarmers and ANZ all four companies are hitting a long term high. These are only four companies in the ASX 200 but they account for one fifth of the weighting in the index. As such, if they have hit their high, then the market will struggle from here.

All of that being said the market continued to move up last week.  This indicates that investors are still positive on the market or that there is nothing else on offer.

Interest rates are still low and the Reserve Bank has been talking down property all week.

One thing is for sure the economy is struggling with more major employers heading out of Australian looking for cheaper countries to run their business. This leads to an economic slowdown in the median term (1-5 years) as these jobs need to be replaced and new industry started up.