Morning Report Tuesday 14 October 2014
The Dow falls another 223 Points, am I still comfortable buying?
I was drinking my espresso this morning, watching Sky Business and the Dow was down 43points, I open my Bloomberg at the desk with a flat white and it’s down +200points, all in under an hour – yes, I do drink too much coffee. The current correction in the leading US Indices are gaining momentum, but it has some ground to cover to match the ASX200 and Russell 2000 indices.
The ASX200 has corrected 9.8% and the Russell 2000 13.8% respectively – see charts 1 and 5.
Even after last night’s washout, the S&P500 has corrected 7.2% and the Dow 6% respectively – see chart 4.
What caught my eye last night was the S&P500 falling 1.65%, but the Russell 2000 only 0.4%. As most of you know by now, I am looking for a decent low any time now in the Australian market for at least a 4-5% rally. Basically I am saying the indices that lead equities lower, are slowly gaining momentum and will lead a recovery.I clarify that we have had no buy signals generated at present, but I do strongly believe that quality stocks can be purchased into any weakness towards, or below 5,100 in the ASX200. I believe we have excellent opportunities arising in the banks and the Iron Ore sector appears to have formed at least a short term base, giving solid support to this 5,100 area.
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