Reporting positives

IT has been an interesting few months for the Australian market. Many stocks rose strongly on announcements, but a number of companies that missed earnings expectations or downgraded their forecast are now worse for wear. Some companies are likely to have been oversold. Good stocks will continue to rise.

The corporate reporting season proved to be a positive influence on the Australian market.

Interestingly, if you compare the performance of the market this year to the prior year, it has performed significantly better in 2018, post-reporting season.

Last year, the All Ordinaries Index fell by around 3 per cent in August and continued to fall into November. So far this year over the same period the market has risen by around 1 per cent.

The winners this reporting season include; Credit Corp Group (CCP), JB Hi-Fi Limited (JBH), Telstra Corporation Ltd (TLS), TPG Telecom Ltd (TPM), Afterpay Touch Group Ltd (APT) and Webjet Limited (WEB).

Those who were not so lucky included Rio Tinto Limited (RIO), Iluka Resources Limited (ILU), Origin Energy Ltd ( ORG), Ansell Limited (ANN), Flight Centre Travel Group Ltd (FLT) and Fortescue Metals Group (FMG).

Around 50 per cent of companies beat analyst expectations; only 20 per cent were below expectations. In the same period in 2017, about 40 per cent were ahead, while around 30 per cent missed the mark.

Given this, our market has had a good reporting season.

The All Ordinaries traded down this week by around 3 per cent. The market opened at 6428 points on Monday before trading down towards 6216 points during trade yesterday. This pullback is to be expected.

The market had risen for 21 weeks to the recent high of 6481 points. When the market is bullish, it will typically rise between 15 and 22 weeks before it pulls back for a number of weeks. Dale Gillham is chief analyst at Wealth Within and author of Accelerate your Wealth.