Australian Investment Blog

Short term caution is definitely warranted for equities World stock markets have enjoyed an exceptional rally since late January with the S&P500 up 15.5%, and the ASX200 up 12% having enjoyed a strong recovery from the resources sector. We believe this 11 week rally is overdue for a correction, or consolidation at best, the nature of this potential pullback will determine our view on what comes next for US equities. The ASX200 concerns us because a number of major stocks hit our long term targets yesterday and have backed off overnight. BHP for example is looking to open over 50c lower this morning even with iron ore rallying a massive 8.8% last night in the US. In this morning's report we are going to focus on four major stocks that have hit / approached our long term targets in the last 24 hours and we are now negative / neutral at best The US S&P500 Daily ASX200 Daily The ASX200 tested strong resistance at 5300 yesterday and a pullback to at least short term support ~5200 looks very likely in the coming days. BHP Billiton (BHP) Weekly Chart BHP has hit our long term "abc" and wave equality retracement target ~$21.20. We advise taking at least 50% profit on any longs, a break back under $19 would be very negative technically. S32 Daily Chart