The ASX200 closed yesterday at the same level it reached in early June i.e. more than 3-months later the market remains unchanged albeit after a failed foray above 7600 in August. We’ve witnessed plenty of sector rotation in the last quarter even if the underlying index has failed to make any discernible headway, the choppy swings between various stocks and sectors has been consistent in its inconsistency but over the months there have been a couple of standouts:
Winners : Energy, Insurance, industrial metals, lithium names and the re-opening theme.
Losers : Gold and Iron Ore.
Elsewhere the volatility was predominantly under-the-hood of individual sectors e.g. Magellan Financial (MFG) fell by over a third while Janus Henderson (JHG) rallied strongly. MM believes they’re remains a couple of very important points to bear in mind so flexible / open-minded investors can thrive during the current choppy market action, as opposed to getting trapped like a rabbit in a spotlight with no plan:
- We may be bullish stock markets into 2022 but the dominant moves will be on the sector level as the bull market slowly but surely matures.
- MM keeps preaching “buy the dip and fade the pop” & / or the market will rally in a “3 steps forward 2 back fashion” but our next major structural shift is likely to be one of a de-risking nature into Christmas, and beyond.
- However, if we’re right and the market does continue to grind higher it could easily be 6-months until we decide to migrate aggressively down the risk curve which by definition implies plenty of exciting opportunities lie ahead for active investors.
Overnight US stocks were choppy but overall quiet with the interest rate and $US sensitive names faring the best e.g. Gold surged well over $US30/oz. The metals were the standout and the local market should benefit today with the SPI futures calling a nice 50-point higher open back towards September highs.
MM remains bullish the ASX targeting fresh highs in the weeks / months ahead
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