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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…
The market was hit early down ~85 points at the worst however the buy the dip mentality emerged again and we saw a decent recovery from the early lows of the session, COVID numbers in NSW going the right way helped but so too did a recovery in the US Futures market during our time zone. For the market to close down 33 points when the Dow was off 700+ points is a solid effort. Lots to get across today on the stock front while from a sector perspective, the lockdown stocks namely Healthcare & IT did best while those linked to economic growth being Materials & Energy struggled again.
We are adding two new positions to the flagship Growth Portfolio today if they trade below our targeted levels
The ASX200 endured a tough start to this week finally closing down 62-points although it was a fair bit worse mid-morning with the index nudging the psychological negative 100-points level at its worst. Losses were relatively broad based with 76% of stocks closing in the red but it was still encouraging to see the market grind higher after its initial savage sell off. A few points caught my attention which dovetails nicely with how MM sees equities through July and August:
The market was hit early thanks to a combination of weak overseas leads, US futures edging lower and the economic reality locally that we’ve shut down a large part of the domestic economy to fight the COVID battle. As a consequence, many are feeling extremely frustrated about the approach taken in NSW plus of course the difficulty in understanding + accessing support packages. That’s the feedback I’ve been getting from business owners in the last 24 hours and its clearly this growing frustration that has prompted Gladys to put a vaccination target of 62% of the State’s population to be vaccinated before these sorts of lockdowns will become a thing of the past.
The ASX200 continues to trade sideways in the face of a deteriorating COVID picture although it hasn’t actually been going anywhere since early June, well before the current Delta wave raised its head on our fair shores. Sydney registered its first case of this outbreak only 30-days ago on the 16th of June, it already feels a lot longer in the Gerrish household! As the the State and Federal Governments again dig deep to support individuals and businesses unable to work due to lockdowns optimism towards the speed of the economic recovery has waned but on the stock market level it’s only produced some rotation between sectors as opposed to core market selling.
The ASX200 has now completed 6-weeks of oscillating in the tight 7200-7400 trading range, it’s becoming increasingly tough to find something interesting to discuss from on index perspective as it remains comfortable meandering around in a small 2.5% band. However on the sector level things have been more interesting
Resilience is the first word that springs to mind to describe this weeks performance by the ASX with the index edging ~1% higher despite lockdowns for 50% of the Australian population. We’ve clearly got confidence in our ability to overcome this set back and/or the ability for Governments to underwrite the economic impacts.
We are making some amendments in the Emerging Companies, International Equities & ETF Portfolios. Please note, SMS alerts are only sent for changes in the Flagship Growth Portfolio. In that portfolio we are looking for further weakness to buy Oz Minerals (OZL) & Santos (STO), hopefully that plays out next week.
The ASX200 slipped lower yesterday, as we come into Friday “the song remains the same” with the local market very happy to simply rotate around the 7300 area whatever the macro / market news that crosses our screens. In what was a quiet session during an even quieter few weeks for stocks a few points did catch my attention:
