The ASX200 again faltered at the 7475 level yesterday, from a technical perspective the pictures getting clearer by the day – when / if the ASX200 closes above 7475 it’s a great buy targeting fresh highs with stops under 7440, excellent risk / reward for the trader. However at MM we are “Active Investors” and as such we’re more focused staying fully committed to stocks until we lose our bullish stance and advocate moving further down the risk curve. The price action yesterday felt more like a lack of buying into strength as opposed to meaningful selling as a number of stocks, courtesy of low volumes, swung around in a fairly exaggerated manner for a day when the index fell less than 0.1%:
- Commonwealth Bank (CBA) reversed lower in the morning only to bounce back in the afternoon to close at all-time highs.
- Webjet WEB) swung around in a choppy 4.5% trading range before finally closing strongly and was ultimately one of the markets top performers.
- Lithium miner Orocobre (ORE) opened strongly before falling all day to close down 3.6%.
If you get too close to this market you will end up feeling like you’re on a fairly fast merry-go-round, on days like yesterday all the buying was in the banks and gold stocks whereas on plenty of other occasions in recent weeks the appetite has been for tech names. At this stage MM intends to remain patient towards our views both on the index level and under the hood but if stocks reach our target areas into Christmas expect us to press some sell buttons. Stocks and sectors have been dancing the bond yield jig of late, what comes next into Christmas is likely to determine if we can follow global markets to new highs but there’s no standout news just yet.
Overnight US stocks were mixed with the broad based S&P500 gaining 0.1% while the tech names dragged the NASDAQ down slightly, strength in financials and miners should help the ASX open higher this morning.
MM remains bullish the ASX targeting fresh highs in the weeks / months ahead
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