“I'm cautious,” said Peter Esho, the Sydney-based chief market analyst at City Index Ltd., a London-based provider of trading services in bonds, stocks and commodities. “It's a shot in the dark.”

David Jones' market value is so depressed, its real estate holdings alone in the business districts of Sydney and Melbourne would be worth as much as A$1 billion if sold and leased back, Bank of America Corp. analysts said in April.

In the interview, Goddard said the company received a two- page proposal from the chairman of EB Private Equity. Goddard declined to name the chairman, or say whether the letter named the advisers acting for the suitor.

“We don't know their partners nor others in any possible syndicates,” he said. David Jones plans to respond to the approach, Goddard said.

Eoin Treacy's view There is considerable uncertainty as to whether this offer to purchase David Jones is in fact credible. This interview on the Sydney Morning Herald's website offers some additional information. Nevertheless it highlights how depressed prices are for the company which has low debt (debt/equity of 16.8%) and an estimated P/E of 12.82. Considering the fact that the company is currently showing a gross yield of 14.07% and has such low debt, it has obvious allure for a private equity group who would conceivably sell and lease back it properties, lower or discontinue the dividend, load up with debt and pocket the proceeds.

The share lost downward momentum from mid-2011 and has now rallied to test the progression of lower rally highs and the 200-day MA. It will need to sustain a move above A$2.60 to confirm a return to demand dominance beyond the short term. (Also see Comment of the Day on May 30th 2012).

Myer's (P/E 5.89 dividend yield 19.02% gross) yield has been flattered by the recent abrupt decline and the chart action would suggest it is unlikely to be able to sustain such a remarkably high pay-out. The share broke its five-month progression of lower rally highs in May and has fallen for the past eight consecutive weeks. It is oversold by any measure as it pauses in the region of A$1.50. Potential for a reversionary rally has increased.

S&P Pan Asia Dividend Aristocrat, Super Retail Group (5.58% gross yield) found support three weeks ago in the region of the 200-day MA and the upper side of the 2011 range. A sustained move below A$6.70 would now be required to question the consistency of the medium-term uptrend.

Woolworths is also an S&P Pan Asia Dividend Aristocrat with a gross yield of 6.61%. It has held a progression of higher reaction lows since retesting the 2008 low in October and a sustained move below the 200-day MA, currently near A$26 would be required to question medium-term scope for continued higher to lateral ranging.

Outside of the retail sector, the S&P/ASX Financials Index has been outperforming the wide market for a year, within an overall ranging environment. It is currently approaching the upper side of the more than four-year congestion area and a sustained move below 0.97 on this ratio chart would be required to question the pattern of outperformance. ANZ (9.21%) Commonwealth Bank of Australia (8.74%), Westpac Banking Corp (10.95%) and National Australia Bank (10.8%) have been ranging for much of the last two years and are currently rallying. All except NAB have held progressions of higher reaction lows since October.

Telstra (10.84%) remains a S&P Pan Asia Dividend Aristocrat and has held a progression of higher reaction lows since late 2010. A sustained move below the 200-day MA would be required to question medium-term upside potential.

In the healthcare sector, Ramsay Healthcare (3.48%) remains a relative outperformer but is becoming increasingly overbought relative to the 200-day MA and susceptible to mean reversion. Sonic Healthcare (5.26%) has held a progression of higher reaction lows since mid-2010 and is currently testing the two-year highs. A sustained move below A$12 would be required to question medium-term scope for additional upside. Cochlear (4.66%) has held a progression of higher reaction lows since October and has been consolidating mostly above the 200-day MA since mid-May. A sustained move below A$61 would be required to check potential for additional upside.

In the resources sector, BHP Billiton and Rio Tinto have sustained progressions of lower rally highs for more than 18 months but are somewhat oversold relative to their respective 200-day MAs and potential for at least a reversionary rally has increased. They will need to sustain moves above their MAs to indicate returns to demand dominance beyond the short-term. Woodside Petroleum has returned to test the psychological A$30 area which has represented an area of support on a number of previous occasions. Newcrest Mining lost downward momentum from last month and has returned to test the region of the 2008 low. Potential for a reversionary rally has increased substantially.

In conclusion, while the S&P/ASX 200 has been uninspiring for the last couple of years, the Australian market has a considerable number of attractive shares which pay respectable yields. An increasing number exhibit patterns of medium-term demand dominance. This should eventually be reflected in the wider market.