The ASX200 rallied strongly yesterday following a good result and subsequent surge by Commonwealth Bank (CBA) – the company beat market expectations by around 5% which led to a 5.6% advance by Australia’s 2nd largest stock. The bank will be trading ex-dividend, $1.75 fully franked next week which must be very tempting for the yield hungry investors. The sentiment which emanated from CBA’s result was far reaching with 87% of stocks posting gains, only the Energy & Materials Sectors slipped slightly after enjoying recent strong gains.
When we look under the hood yesterdays buying had a real “bargain hunting” feel about it with some of the standout performances coming from the recently downtrodden names, also some profit taking was evident in some of best names of 2022, a little stock rotation was in play:
Winners: Magellan (MFG), Zip (Z1P), Appen (APX), a2 Milk (A2M) and Ansell (ANN).
Losers: Macquarie Group (MQG), Woodside Petroleum (WPL) and BHP Group (BHP).
Wednesdays advance by the banks has taken the ASX200 back above the technical resistance at 7200, suddenly we’re less than 5% below 2021’s all-time high – how quickly things can reverse. However I don’t believe sentiment has changed which is likely to be one of the very reasons stocks can keep defying the bears and grind higher e.g. I heard the phrase “it’s a dead gate bounce” twice on Wednesday. At MM we are sticking with our “buy the dip and sell the pop” mantra for 2022 with the emphasis having switched to the sell side but on the index level that could easily be around 7600, or even above.
Overnight saw US stocks continue their strong recovery led by US tech which finally closed up over 2% with Facebook parent Meta Platforms Inc the standout bouncing over 5%. The SPI futures are pointing to an open above 7300 for the ASX200 this morning with strength in tech and resources likely after copper surged 3.8%, although BHP did slip another 0.6% in the US.
MM is net bullish the ASX following its close over 7200
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