The ASX200 again rallied strongly after briefly dipping below the 7450 level – I’m almost getting bored of saying “buy the dip” but yet again the local market found a low just as Gladys delivered the NSW’s COVID statistics before enjoying solid buying throughout the day to reverse early loses and close marginally higher, a +1.2% intraday turnaround. Very similar to the trend in home schoolings, the low is certainly formed in the AM before a recovery plays out in the PM! Yesterday it was the unusual combination of IT, Gold and Reopening stocks led the advance while only the oil stocks stood out in the losers circle.
The market appears to be in a holding pattern as it attempts to decipher the ongoing COVID news, the vaccination led re-opening trade currently looks to be the front runner with bond yields and the $A edging higher since Gladys et al performed a policy pirouette in late August. Interestingly the previous 201-point pullback back in June / July took 6-weeks to evolve before it broke out to fresh highs, the current consolidation pattern has just entered its 5th week implying it can tread water for a few more days yet and to state the obvious the longer it can hold above 7400 the more likely its next stop 7700 – now our slight preference.
During our time zone yesterday the Asian region finally offered some support to risk assets as positive / supportive noises for business out of Beijing helped most major indices rally between 1 & 2%. However when we consider that the likes of Hong Kong’s Hang Seng Index and China’s Shenzhen CSI 300 Index have corrected over -20% from their February highs, while the ASX has continued to rally, illustrates the limited correlation across the countries but further positive external influences should only help our index scale new heights.
US stocks were closed for Labor Day but their futures advanced steadily to close up +0.2% helping the SPI futures imply a small early gain for the ASX this morning but at this stage a quiet session feels likely.
MM remains bullish the ASX and keen buyers of pullbacks
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