MARKETS SPECTATOR: No-brainer rally

Stocks may be in for a bit of a breather as investors take profits, but a continuing flow of money away from cash paints a bullish scenario for high yielding and cyclical shares.

Since the S&P/ASX 200 index and the S&P 500 hit a low on the November 16, they have gained 4.1 per cent and 3.6 per cent respectively, with the Australian bourse outperforming. Of those 14 trading days, the local market has only finished in the red on four occasions, which is what I would deem a pretty strong snap-back rally following the post-election sell-off.

However, it now starting to feel like – and has been confirmed by recent price action – that the market wants to take a bit of a breather, and maybe even see a modest pullback as traders look to lock in some profits.

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