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The air was once again thin above the 6800 level on the ASX today with stocks pulling back from post pandemic highs. Retailers were in focus following a strong set of numbers by Nick Scali (NCK) while AGL Energy (AGL) showed why it’s been a good idea to avoid that dividend trap this year and last with a ~$3bn write down – from experience big write downs often happen at lows – more on both of these below.
The ASX200 enjoyed another strong February session yesterday rallying almost 1% to take the advance from Mondays low to 4.7%, not a bad way to start the month. The gains were broad-based with over 80% of the market rallying but Banks, Real Estate and Healthcare stocks caught my eye on the upside while conversely the Resources Sector took a well-deserved rest.
The market hit a new post COVID-19 high today trading to 6852, up around 5% from the Monday morning lows in what was another broad-based rally across the market. 166 stocks closed higher in the ASX 200 today, two stocks we’ve been talking about of late, Virgin UK (VUK) and Corporate Travel (CTD) led the charge adding +14% & 6% respectively. Gold was on the nose as money abandoned safe havens although the broader resource trade also struggled.
The ASX200 has gone from strength to strength since it reversed strongly on Monday morning, its advance on Tuesday compounded gains to almost 250-points in under 36-hours, a little longer yesterday and we would have been nudging fresh post COVID highs – perhaps today! Under the hood the Healthcare Sector was the only one to lose ground while gains were broad-based with over 70% of stocks rallying.
We’re tweaking the Flagship Growth Portfolio today making a relative performance call. While we like VOC and see it higher over time, we need to make room for VUK, which we think can have a more explosive move.
Last week’s pullback now seems a distant memory as the market roars back to life, the ‘Robinhood Rout’ seemed to be a convenient excuse for the market to have a break, rinse out the weak longs before the reality of low interest rates and abundant stimulus once again becomes the dominate theme.
The ASX200 enjoyed an extremely bullish turnaround to kick off both the week and February, after being down 90-points late morning the sentiment turned on a sixpence as “risk on” prevailed across the board – on the local bourse we finally closed up almost 1% with 60% of the market rallying led by the Healthcare & Resources Sectors. Elsewhere Asia followed suit with most major indices gaining over 2% while silver soared over 10% to make an 8-year high as the “Reddit Army” turned its attention to commodities – as we keep saying volatility is set to rule in 2021.
A strong turnaround from stocks today after trading sharply lower in early trade. At its worst the ASX 200 was down -90pts hitting a low of 6517 smack on 11am. It’s uncanny how often the market makes a pivot point around 11am after margin calls filter through early, stocks get dumped and then cooler heads prevail. We’d been targeting a move down to 6500 and todays bounce (for now at least) from that level looks a solid one as the intra-day chart below clearly shows
Over the weekend the market news was mildly negative in my opinion as 80% of WA’s population went into a COVID lockdown for the first time in over 6-months. A new case has been recorded of the potentially highly infectious UK strain of the virus by a hotel guard who never actually entered a hotel room.
The ASX200 has just endued its worst week since October finally closing down almost 3%, we’ve mentioned a few times this month that our “Gut Feel” has been the next ~5% move for stocks would be down, although we remain bullish, things now appear to be following our 2021 roadmap – on an index level we will be keen buyers around the 6500 level.
