Morning Report Tuesday 17 March 2015
The “stars need to align” in order to witness a significant move at major turning points of a market. In the short term, I believe this is currently unfolding with a break towards 6200 likely over the coming days/weeks – see chart 1. Technically, I need to see a close over 5875 to have confirmation and importantly, a close stop under 5850, but the parts of my jigsaw puzzle are coming together. I have mentioned a few times recently that the resources sector will need to bounce in order to aid the banks and drag the ASX200 upwards towards 6200 and I now have trading buy signals from parts of this sector. Let’s look at some individual pieces of the puzzle:
1. The ASX200 has corrected back to the 5750 area as expected, a clear break over 5875 will look great technically, with stops under 5850 – see chart 1.2. The US Indices have struggled in 2015 and while short term the market still looks shaky, my target for the Russell 2000 remains 5% higher – see chart 2.3. The German DAX, and European Indices, remain extremely bullish with the DAX now up 24 % in 2015. While I expect a breather in the coming week, or two, I can see this advance going much higher as QE kicks in hard. It’s interesting how we all ignore Greece when the markets bullish – see chart 3.4. Crude Oil has achieved my target of fresh lows for 2015, from this region I am expecting a $US10/barrel bounce, a +20% move – see chart 4. Traders have reduced their net-long speculative position to the lowest levels since January 2013 – the masses are often wrong.5. Iron Ore has generated no buy signals and I am definitely not an investor in this sector. However, Fortescue Metals (FMG) has generated a technical buy signal targeting a bounce of at least 50c, around 25% - see chart 5.6. The banks continue to look excellent with 3 of the “Big 4 banks” targeting fresh all-time highs in coming weeks. If today’s RBA minutes at 11.30am give any sniff of a rate cut in April/May they could even explode today – see chart 6. Remember we are also entering the most seasonally bullish period of the year for bank stocks.
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