The market has shown signs of turning from bullish to bearish, but materials, energy and healthcare look ready to run, according to chief analyst at Wealth Within, Dale Gillham.
Gillham said materials were the best performing sector the past week, with strong rises from Rio, BHP, and FMG, supported by a weakening Australian dollar and rising iron ore prices.
Energy and information technology also looked good, while telecommunications was down around four per cent, and is down around 18 per cent in total for the year, which can be attributed to Telstra’s 20 per cent drop.
The Australian Competition and Consumer Commission also last week flagged concerns about Telstra as its share price was down 5.3 per cent from open, and there’s speculation that should the merger between TPG and Vodafone fail, Telstra can expect more competition around pricing and service offerings.
Gillham said interestingly, the telecommunications sector tended to move in parallel to the US telco sector, given that over the past month it looked more bearish, but he noted some good opportunities could arise in 2019.
“I think the market is turning from bearish to bullish as all the signs are there for it to turn,” he said.
“It may just be that the timing for the turn has been pushed out a few weeks. Given this, I believe the Australian market will rise over the next two to four weeks and move up through 6000 points. In my opinion the banks are not ready to run yet, so my attention is on the Materials, Energy and Healthcare sectors.”
In the month to date, data from FE Analytics shows industrials are in the lead, with -2.15 per cent returns, followed by telecommunication services at -2.83 per cent, and health care at -4.75 per cent.
Financials sit at -5.08 per cent for the month to date, consumer staples at -5.53 per cent, materials at -5.99 per cent and energy at -7.47 per cent.