The Sector Rotation Juggernaut picks up steam (RIO, ALL, RRL, CGF)
The ASX200 was very choppy today, albeit it in a very tight range, oscillating between 5664 and 5685. We finally closed up 6-points at 5670, however the under the hood the sector movement within the market was significant, primarily between the banks and resources:
1 The banks closed up ~0.4%, led by CYB Plc (CYB) which was up +2.58% and Westpac (WBC) +0.56%.
2 Conversely, the resources were under significant pressure, led by OZ Minerals which fell -2.95% and RIO Tinto (RIO) -1.99%.
Remember it’s only a few weeks ago that MM sold BHP at $27.61 and bought CYB at $4.69, that switch has now moved almost 17% in our favour, a great start to-date. Interestingly as is so often the case, selling BHP was not particularly popular with some of our readers, but as we continue to stress this is a market where investors must remain open-minded and flexible.
Importantly, we believe the outperformance by the banks over the resources has further to run – sit back and enjoy!
Also, today we purchased Aristocrat above $20.50, raising our entry level from yesterday’s $19.95 and we sold out of Healthscope (HSO) at 1.665, realising a small loss of ~3%.
Overall the market had a range today of +/-12 points, a high of 5685, a low of 5666 and a close of 5670, up 6 points or 0.11%.
Our cash levels are now sitting at 17.5% for the MM Growth Portfolio, which feels ideal considering our view that the ASX200 is likely to test the psychological 5500 area remains intact.
ASX 200 intraday Chart
ASX 200 Daily Chart
1 Aristocrat Leisure (ALL) $20.69 – We are still hoping to purchase more ALL under $20, probably a further ~ 2 or 3% for our Growth Portfolio.
*Watch for alerts.
Aristocrat Leisure (ALL) Weekly Chart
2 Challenger (CGF) $12.25 - We allocated 3% into CGF yesterday at $11.95 and remain keen to increase our exposure by another 2/3% into any further weakness, ideally at lower levels.
*Watch for alerts.
Challenger Financial (CGF) Monthly Chart
3 RIO Tinto (RIO) $65.47 – RIO has now corrected 6.6% over the last 3-weeks, we are keen to buy weakness in the resources sector but are comfortable remaining patient for now with our ideal entry level under $60, another 8% lower.
*Watch for alerts.
RIO Tinto (RIO) Weekly Chart
4 Regis Resources (RRL) $3.62 – We have had RRL on our radar for a while, but feel comfortable remaining on the sidelines for now.
*Watch for alerts.
Regis Resources (RRL) Weekly Chart
Have a great night
The Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday.
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