Morning Report Thursday 31 July 2014
My “gut feel” has looked after me over recent weeks; my wife would put that down to my diet but over 20 years’ experience in the market helped. In the recent Hickman Report I wrote, the below plus the observation of the charge up in the Canadian market caught my eye.
“After last week’s strength in the domestic market I want to again sit on the sidelines for a few days but my “gut feel” is we will see a fresh high over 5600 early next week to tie in with CBA testing $83 prior to a pullback.”
Basically, domestic equities market is breaking out in a very positive manner, assuming it can hold above the 5,500 area (only 2% lower). I can now be comfortably positive the ASX200 with a stop (wrong point) only 2% away which equals excellent risk reward. I feel Fund Managers are simply looking at underperforming markets to switch some of their monies into, plus some that have been overweight cash are biting the bullet and paying up for stocks. We are currently seeing strong upward momentum in the Australian, Canadian and Hong Kong Indices (charts 1-3), while the US S&P500 continues its mature advance. Any weaknesses in the US Indices are likely to continue to create buying opportunities domestically.
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