In 2013 the Australian market started the recovery out of the GFC. At this point volatility was still high it took two years before it broke through the 6000 points for the ASX 200 in February 2015. This was a mile stone as 6000 points was a resistance level. Over the following 12 months the market pulled back to 4800 points in February 2016 before starting a steady move back up to a high of 6100 points in December 2018. Over this time the market was in a trading range between 5200 points and 5700 points.
Right now the market is trading 5960, in October 2017 we saw strong growth in our market, in February 2018 due to interest rate risk and increased volatility we saw the US market pull back and along with our own market. For the past 6 months it has been hard to fine value in the Blue Chip companies, all looked to be fully valued. No reason not to continue to hold these investments but no reason to rush in and buy either. In these situations either the price of the shares pull back or their profits improve to justify their price.
At present we are expecting that the price will pull back, our short term target for the market is 5680 points, it may not get to this point exactly, but we expect the market will be soft going forward.
So what do we do?
Any weakness in the market is a signal to buy and hold for the long term.