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The market was more bullish today than futures were implying this morning with strength across the resources overlapping bank buying, which is an influential partnership at the index level. Clearly, the market is retaining its bullish bias as more fundies get back to their desks with the least resistance still on the upside – a trend we need to respect for now.
The collapsing nickel price bears a painful resemblance to lithium, both of which are used in EV batteries. However, the surging increase in demand that was anticipated to propel the sector higher has arrived with a relative whimper, while supply has increased unabated from Indonesia in anticipation, with the result being a glut & depressed prices, e.g. the nickel price has halved over the last 12-months. We’re now seeing the likes of Twiggy Forest shutting down Nickel operations his private company Wyloo acquired just six months ago, while BHP is facing similar issues.
A good session today unless you hold Lithium stocks, with the ASX kicking off the shortened trading week on the front foot. Banks offered support at the index level with the Big 4 breaking out of their recent trading ranges and looking strong, while the supermarkets finally found some love and rallied from recent lows – the risk/reward now looking good in that sector.
We had a significant number of questions come in over the break, and we couldn’t include them all in the usual Weekend Q&A on Saturday. Here’s a special Monday follow up report, with additional Q&A.
Global equities have maintained their bullish advance, which started back in October 2022. There have been plenty of reasons for risk assets to roll over in recent years, from wars to an embattled Chinese economy and surging interest rates, but stocks have continued to rally – plenty of pundits are licking their wounds at the start of 2024. As we often say at MM, a market that can advance on “bad news” is a strong market that should be respected.
Most years in January, we remind subscribers that indices often form important pivot points in the first few months of the year on the stock, sector and index level, e.g. the ASX200 formed an important top in 2020,2022 and 2023 and a low in 2019 and 2021.
Local equities snapped a 5-session losing streak today, rounding out a soft few days to bounce into the weekend. Supported by strength overnight, the ASX200 hit a high of 7446 early, up +100pts on the session but the move tempered into the afternoon. Still, the 74pt gain today was the best session for the index in more than a month, led by Tech and Healthcare. Utilities were the only sector to finish the session lower. The ASX200 fell -1% this week, a soft Materials sector being the main drag.
We are less than three weeks into 2024, and it’s evident that today’s market is focusing more on the micro/stock news as opposed to the macro, at least for now. The US NASDAQ registered fresh all-time highs overnight, even as Fed members attempt to rein in the market’s optimism with regard to rate cuts in 2024, i.e. a market that rallies on bad news is a strong market. At MM, we have been bullish towards tech for over twelve months, targeting the recent advance by the “magnificent seven.”
The sell-off on the ASX continued today, although the morning session saw the worst of it, with the market down ~70 points just after the open, before buying the dip played out initially, with that trend continuing as employment data came in softer than expected at 11.30 am, good for the prospect of rate cuts and therefore good for stocks, and that saw a choppy session end at the mid-point of the day’s trading range.
We are amending the Active Growth Portfolio
