The ASX200 again managed to hold onto its 7200 support in admirable fashion yesterday even in the face of a 725-point plunge by the Dow, the markets “buy the dips” attitude is undoubtedly working for now. However while MM is part of this core view that the bull market is alive and well our preferred scenario is we get a short sharp washout down ~4% to catch out the complacent traders / buyers because as we know in markets all good things do eventually come to an end i.e. MM like many fund managers is looking to buy weakness but we believe it might be a touch lower than many are assuming hence our gradual accumulation as opposed to “all in” style buying.
Stocks continue to evolve in an almost “us and them” like fashion with the value stocks struggling while many growth names flourish, its far from a new theme but one we are preparing to fade moving forward. As the weeks pass by the performance differential between the two groups slowly grows, we believe the relative journey is probably somewhere between 80 & 90% complete. On Tuesday MM pressed 2 buy buttons for our Flagship Growth Portfolio as we started to follow our well flagged plan to commence accumulating resources stocks into their current weakness:
- MM allocated 3% into energy play Santos (STO) ~$6.50, we plan to increase this position to 5% if we see further weakness back towards $6.25 i.e. another 4% lower.
- MM tried to allocate 3% into OZ Minerals (OZL) below $20, we fell 1.5% short on Tuesday but the order remains “alive” in the market until further notice with plans to take the holding to 5% if we see a break into the $18-$19 region.
MM remains a keen buyer of market dips with the 7000 area the first technical support area
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Overnight US traders again bought the dip producing the markets best day since March, the cyclicals which led the declines on Monday reversed strongly as the Delta Variant took a back seat reiterating the markets underlying bullish mood, it doesn’t like being down for long! The Financials were the standout sector on the night which bodes well for the local market today, the SPI futures are calling the ASX to bounce around 50-points this morning
