Morning Report Thursday 3 June 2014
We start the New Financial Year up 80 points - Is my pullback view wrong?
As I mentioned in yesterday’s report, even though I am expecting a decent pullback (to buy) in coming months, when stocks that I like fundamentally and technically hit my buy targets, I will buy them because my overall view may be wrong and also some stocks do rally when an index retraces. However, I have repeatedly stated over recent weeks that I expected the Russell 2000 Index (chart 3) to make fresh 2014 highs prior to any meaningful pullback in US Indices. This occurred on Tuesday, so I now expect a 8-10% correction in US Indices minimum. The hardest factor is determining how this may affect the domestic market. All I can do is look at my target levels in overseas indices and compare to where the ASX200 was at the equivalent time and see how the market unfolds.
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