Morning Report Friday 2 April 2014
The ASX200 has fallen 116 points (-2.1%) since Wednesday, certainly not major, but considering that the Dow is up almost 200 points over the same timeframe it is certainly noticeable. The US Indices remain very strong with the Dow closing less than 100 points from all-time highs this morning; I am still 50-50 whether they push higher short term prior to a meaningful correction. However, returning to basics, the ASX200 valuations are at the top end of their historical range and artificially low interest rates will end soon, leaving the Australian share market vulnerable to a decent correction. I have moved to approximately 75% cash with the only core stock I currently hold being Suncorp (SUN). It was nice to see Suncorp up yesterday as the banks were sold hard. The ASX200 has rallied 923 points since the lows of last May so a 350 point retracement is not significant - see chart 1.
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