Aussie market started strong and then pulled back before a late recovery to end a decent positive day. The market valuation looks stretched at 5200-5300 and the two main sectors (i.e. banks and miners) seem to run into a brick wall. The two key risks for the Aussie market in the short term are US reporting season and Commodities. Last two negative quarters drove the market into profit taking mode and we expect this quarterly will also deliver similar result from the highs. Any profit taking in the US and Australia will get dragged down. The next big negative is the risk of falling commodities and the currency as a by-product. Pullback in US market, commodities and/or currency will be negative for Aussie market. Time to be patient and pick the time to buy-in or add more exposure…maintain medium to long term view > long Yield and Gold, short Iron Ore and Oil. May has historically been a negative month. Stretched valuations and lack of positive catalyst means that the markets are highly prone to repeat history. (VIEW LINK)