On Monday the ASX200 tried and failed yet again to break through the 7480 barrier, perhaps it will be 8th time lucky. By lunchtime yesterday it actually felt like the local market was going to break out above its October / November high but the buyers aggressive morning appetite faded after lunch although we still managed to close within 10-points of MM’s technical breakout level. We are mid-way through November and its range is less than half of the monthly average through 2021 which implies a break above 7480 should see a test of 7600 in just a few weeks aka like a champagne cork popping – watch this space.
During what was a quiet day the standout sector to MM was the resurgence of the tech stocks as bond yields appear to have found a new level of equilibrium – at least for a while. The local tech stocks are hovering within 2.5% of their February all-time high which we feel is a strong performance considering the huge headwind delivered by rising bond yields both locally, and overseas. Back in 2018 when bond yields rallied we saw a major “taper tantrum” by the growth names such as tech and healthcare but so far 2021 has been a very different story.
The market feels like it’s looking for some fresh news to drive prices as it dismisses bond yield appreciation as passé but if nothing surfaces over the coming weeks we still believe the path of least resistance will be with the seasonal lack of selling which is likely to be enough to see the ASX200 test / break it’s 2021 high. The index simply needs more days like Monday where no influential sectors exert undue pressure on the index while a few areas enjoy some buying.
Overnight US stocks were choppy and closed pretty much unchanged unfortunately the SPI futures are calling the ASX200 to forgo yesterdays gains early this morning after the Resources Sector fell 0.5% in the US.
MM remains bullish the ASX targeting fresh highs into Christmas
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