Author: james Carter
Morning All,
As the US sits back and enjoys their Thanksgiving the short-term bullish trend for the ASX200 has clearly been established. Even with no major leads from overseas markets the futures are pointing to a 25-point higher opening, well over 5500. We remain bullish with a break back over 5600 a very strong possibility for 2016, we will be watching both the seasonal and technical paths closely over coming weeks, for the traders we anticipate the below:
The local stock market has finally gained some of the strong positive sentiment that has been flowing in the US since the Donald Trump victory, over the last 2 days the ASX200 has rallied 137-points (2.5%). Yesterday’s buying was unrelenting sending the market higher throughout the day – see Wednesday’s MM Afternoon Report. The move felt like fund managers were being forced to increase their exposure to a rising market, a phenomenon that we have discussed and been expecting to eventually emerge. This buying coupled by a dearth of sellers because the very same institutions are underweight stocks can be explosive.
The “crowd” has had a tough time over recent years whether its panic selling of resources last Christmas, buying the banks at crazy levels mid-last year or chasing the yield play only a few months ago it’s been an uncomfortable ride. As investors we need to look 6-12 months ahead and always consider how the market is positioned. If everyone is already long there will simply be no buyers left however good the story, and when the horizon becomes vaguely cloudy the storm that follows can be ugly.
Really bullish, there's more to go in the reflation rally
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