Month: November 2016
The local stock market has finally gained some of the strong positive sentiment that has been flowing in the US since the Donald Trump victory, over the last 2 days the ASX200 has rallied 137-points (2.5%). Yesterday’s buying was unrelenting sending the market higher throughout the day – see Wednesday’s MM Afternoon Report. The move felt like fund managers were being forced to increase their exposure to a rising market, a phenomenon that we have discussed and been expecting to eventually emerge. This buying coupled by a dearth of sellers because the very same institutions are underweight stocks can be explosive.
The “crowd” has had a tough time over recent years whether its panic selling of resources last Christmas, buying the banks at crazy levels mid-last year or chasing the yield play only a few months ago it’s been an uncomfortable ride. As investors we need to look 6-12 months ahead and always consider how the market is positioned. If everyone is already long there will simply be no buyers left however good the story, and when the horizon becomes vaguely cloudy the storm that follows can be ugly.
Last night global equity markets continued to surge with the S&P500 making the fresh all-time highs we have been forecasting all-year. Hopefully the local ASX200 will regain some much needed “mojo” into Christmas, it currently sits 4.9% below this year’s high, 12.1% below its 2015 high and a horrible 28% below its all-time high. On the index level at MM we channel a significant part of our energy into tracking the US market for 2 main reasons:
Great to see more questions flow in over the last week or so with a broader topic base – not just around the implications of Trump – although one has crept through the cracks! Firstly though, lets re-cap our view both in the very short term and for the end of CY16 and early CY17.
Really bullish, there's more to go in the reflation rally
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