Equity markets see red – is this time to buy, or time to jump from a sinking ship?
On Wednesday, MM increased its cash position in the Growth Portfolio to 15% by realising small profits in both our BetaShares Bear ASX200 ETF (BEAR) and US Dollar ETF’s. While we could see these positions going marginally further we wanted to concentrate on the further opportunities within the Australian market which have now arrived, a touch faster than expected.
Do we think there’s more to come or is this the ideal buying we’ve been targeting over recent weeks / months opportunity.
Overseas Indices
When we look at US indices 2 things catch our eye:
1 The Dow has unfolded as we have been forecasting in our Chart Pack, assuming of course it doesn’t follow through to the downside.
2 The Russell 2000 has now generated a sell signal eventually targeting another ~5% downside.
When we looked at APPLE Wednesday we were keen buyers into weakness and its reached our initial buy zone yesterday morning whereas the likes of Amazon has exceeded it. We are bullish APPLE around $US215 targeting ~15% upside, plus we would average if weakness persists to around $US200.
Dow Jones Chart
Russell 2000 Chart
European stocks are unfolding as expected, we’ve been targeting the German DAX in 11,350 region and its likely to test close to this region this evening.
On a risk / reward basis we believe it’s time to buy European markets around 1% lower NOT panic sell.
German DAX Chart
Moving onto Australian stocks / positions and one quote from our report yesterday jumps out at us loud and clear:
“NB In my years of investing in the local market I’ve noticed the ASX200 very often reaches a meaningful low the day after the US has a particularly bad day, not really occurred to-date.”– MM on Wednesday.
When we’ve been planning to buy panic don’t be scarred to stand up when it occurs, if we are wrong and it follows through the pain will be a lot lower than if we had followed the lemmings into a strong market back in August – we are now over 7% below those levels.
