The MSCI World Index has been trading in a very small 6.6% trading range for all of 2021 while maintaining its clear bullish uptrend shown below, it’s not just the ASX which has been experiencing a very quiet year! Following the strong sessions we witnessed across the risk spectrum at the end of last week a rally to fresh 2021 highs feels almost inevitable i.e. both the post GFC and COVID bull markets remain in place. Our initial target is a test of 2900 but this remains a breakout MM will be more inclined to fade as opposed to chase.
At times like this subscribers should remember the old adage “the trend is your friend” when looking to disembark a bull market as they have a habit of going both further and longer than most pundits anticipate.
MM is bullish the MSCI World Index into April.
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Last week the small cap Russell 2000 index followed our flagged roadmap for an imminent 10% correction, a move which was reflected in the Australian Resources Sector. After finally pulling back 11% the outperforming index has bounced strongly and although we are now 50-50 right here the ideal risk / reward scenario is we see a rally towards 2400 which ultimately fails and the index subsequently corrects the huge advance from last March.
MM is now mildly bullish the small cap Russell 2000 Index targeting the 2400 area.
The tech based NASDAQ shown below continues to rotate between its February high and March low, a trading range of over 10%. Although Friday saw a close almost smack in the middle of the range our preferred scenario remains these recently struggling growth stocks can again shine as bond yields take a rest on the upside, our best guess a move towards 14,000, or 8% higher.
MM can still see US tech outperforming in the coming weeks.
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