Outperforming Australian shares are highly vulnerable to a pullback in the coming week as a recent rally loses steam, dealers said on Friday.
The benchmark S&P/ASX 200 added 20.1 points or 0.43 per cent over the week to close at 4,713.3.
A stronger-than-expected September forced many investors to buy back into the market after a widely-expected pullback failed to materialise, and stocks are moving unpredictably, said CMC Markets analyst James Foulsham.
"Historically September is a time when there's pullback in the market," Foulsham told AFP.
"October could still be volatile but I guess a lot of people that were kind of positioning themselves for a bit of a pullback had to buy back into their positions, so that sort of pushed the market up a little bit," he added.
Foulsham said it was difficult to say how sustainable the rally was, adding that he wouldn't be surprised if a pullback was imminent.
"It kind of looks like the US is slowing down a little bit ... I just think we're going to see some choppiness, it's going to move around a lot and it's just difficult to predict which way at the moment," he added.
AMP Capital Investors chief economist Shane Oliver said shares were vulnerable to a correction, with the last major retreat taking place in June and July and gains of more than 50 per cent in the last six months.
"However, any correction is likely to be limited and further strong gains are likely by year end," Oliver said.
"Many investors have missed the rally and are likely to buy into any weakness." He said the combination of an improving economic and profit outlook along with low inflation and interest rates and cheap shares are good for the market.