The ASX200 enjoyed an explosive start to the week with over 80% of the main board advancing led by the banks, energy and tech stocks, if we take the gold sector out of the mix it was almost a clean sweep for the bulls. There are only 3 trading days left of this financial year hence the easiest call for the next few sessions is we should expect plenty of volatility under the hood of the market, in both directions. Second-guessing which stocks will surge or plunge is akin to a game of two-up hence we would rather step back and see if anything becomes too cheap or expensive and then we can act accordingly i.e. don’t be surprised if you receive another trading alert over the coming week.
However, while the ASX200 continues to follow both the seasonality & MM’s road map into the 2nd half of 2022 it’s important to maintain focus on what we believe is likely to unfold moving forward:
- We continue to believe the ASX200 will struggle in the 6750-6800 region i.e. a ~6% bounce from Junes low but not far from yesterday’s close.
- Hence we are likely to de-risk our Flagship Growth Portfolio into such a move, ideally by increasing our cash to add more flexibility.
- We want to have some cash on hand to buy aggressively into another equities washout if it occurs over the coming months.
Interestingly the headlines reverted back to Russia’s invasion of Ukraine yesterday with an interesting effect:
- Russia has defaulted on its sovereign debt for the first time since 1918.
- The G7 is going to impose a ban on gold imports from Russia plus they’re considering a Russian oil price cap.
Basically, the G7 are saying that further inflation is acceptable as they exert more pressure on Russia, this would have sent stocks reeling a few weeks ago but on Monday they took the news in their stride i.e. in the short-term the path of least resistance remains up.
US stocks experienced a volatile session as the end-of-quarter rebalancing appeared to be the main game in town, after rallying early in the day the S&P500 finished down -0.3% with the broad market slipping lower as bond yields edged higher. The SPI futures are pointing to a flat open this morning with no obvious direction from overseas bourses.
MM is mildly bullish the ASX200 short-term
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