The ASX200 fought valiantly on Tuesday to finally close up +0.4% on tentative buying and a strong lead from US Futures during our day session however it needed a bounce by the Resources & Energy Sectors to lift the nervous market which still saw the losers outnumber the winners. As subscribers know we increased our exposure to stocks yesterday – I apologise to anyone who didn’t receive the SMS notification, we’re confident this issue will be resolved by Friday:
- Flagship Growth Portfolio: we increased our Seek (SEK) and REA Group (REA) positions from 3% to 5% while we initiated a 3% position in Megaport (MP1).
- Active Income Portfolio: we allocated 4% to APA Group (APA).
- International Portfolio: we allocated 5% to Disney (DIS US).
We’ve followed our flagged plans to migrate up the risk curve into the current market weakness with our bias towards tech stocks very evident as we follow our view that bond yields are close to an inflection point, at least for 2022. We continue to look for the ASX200 to range trade between 6400 and 7100 into 2023 which by definition suggests the risk/reward favours the buyers at current levels – we now need to monitor the market very carefully as further news-driven turbulence feels almost guaranteed and it will be how the market deals with such events which is likely to determine if we are correct i.e. we are looking for a catalyst to re-instil some confidence back into investors which could bring some of the $US5 trillion of cash sitting out on the sidelines back into equities.
- MM believes the ASX200 is “looking for a low” for 2022 as the markets internals slowly improve but further volatility and dips wouldn’t surprise.
US stocks fell for a 6th straight session overnight after surrendering some decent gains in the second half of the day as a number of Fed officials reiterated the board’s rhetoric to continue their aggressive fight against inflation. The S&P500 is now in the midst of its longest losing streak since early 2020 as safe-haven assets remain the investment of choice. The only good sign was a positive close by tech stocks while the S&P500 slipped just -0.2%, the SPI Futures are calling our market to open down ~0.6% this morning, within clear striking distance of Junes low.
MM remains bullish the ASX200 into Christmas
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