Morning Report Friday 20 March 2015
After watching the ASX200 surge 108 points (1.86%) yesterday, I enjoyed both the paper returns and increased my confidence around my 6200 target for coming weeks/months – see chart 1. The important issues at hand now are how we invest/trade from here and lessons to be learnt from recent moves in equities. Remember, the day you stop learning is the day you start regressing.I wrote a morning report recently that statistically illustrated why investors/traders should buy strong stocks going up and not weak ones falling hard. Yesterday, this was illustrated perfectly and simply, by Myer (MYR) and Commonwealth Bank (CBA):
• Myer (MYR) fell 10.1% yesterday after reporting its first half profit fell 23% and issuing yet another future profit warning. The stock is over 50% below its 2014 highs. Technically, the stock remains on target for the $1.10 area minimum, aggressive traders may want try picking a low in this area, but please use good risk/reward – see chart 3.• Commonwealth Bank (CBA) rallied 2.38% yesterday to fresh all-time highs as the market chased quality yield paying companies. The stock is 32% above 2014 lows. This has simply been a relaxing advance for all investors who are also receiving a quality fully franked dividends on the journey. Quality investing is relaxing investing.
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