The ASX200 took a well deserved rest yesterday after its impressive surge so far this month, interestingly a move which wouldn’t surprise the disciples of statistics with November actually the strongest month of the year for US stocks in an election year. The pullback on Thursday had a lacklustre drift feel about it as opposed to anything more sinister with 35% of the market still managing to close up on the day. A few days consolidation around the 6400 area feels logical after the recent 566-point / 9.6% rally but we’re in no hurry to sell this market per se, our focus is more around stock and sector selection after the macro events of the last 10-days.
The ASX put in a far better performance on Wednesday steadily rallying throughout the day to finally close marginally up on the session, a solid performance considering the current global acceleration of COVID cases – German Chancellor Angela Merkel is now looking to close bars and restaurants for a month and France is moving into a stricter lockdown on Friday, travel shares struggled on the ASX yesterday and the trend continued across Europe last night. The local market will be tested again today following an awful night on Wall Street where stocks fell by the most in months with losses across all 11-sectors of the S&P500.
update 28/08/2020 16:02 On the index level we remain bullish targeting an eventual “pop” above the 6200 area by the ASX200 although the 6000 “magnetic pull” continues, in our opinion the higher the US Indices rally without local participation the greater the possibility that such a rally towards 6300-6500 will become a false breakout, at least short-term. MM has remained fairly aggressively positioned well up the “risk-curve” since March’ s virus led savage sell-off but we reiterate our intention to migrate slightly away from risk if / when such a rally unfolds.
After 6-trading days in a tight 125-point / 2% range the ASX200 gave any complacent investors a quick COVID-19 shot across the bow as the local market tumbled -2.5% on Thursday. The catalyst for the selling was the increasing cases of coronavirus creating serious doubt in many investors’ minds around how quickly the global economy can put the pandemic well and truly in the rear-view mirror. Our current opinion at MM is equities did get slightly ahead of themselves in writing off the virus but we’re better prepared for secondary outbreaks plus of course every week that passes is a week closer to a vaccine Hence MM remains buyers into weakness. Plus, to help us all from an investing perspective we’ve now got a potential road map of sector performance from March until today.
The ASX put in a far better performance on Wednesday steadily rallying throughout the day to finally close marginally up on the session, a solid performance considering the current global acceleration of COVID cases – German Chancellor Angela Merkel is now looking to close bars and restaurants for a month and France is moving into a stricter lockdown on Friday, travel shares struggled on the ASX yesterday and the trend continued across Europe last night. The local market will be tested again today following an awful night on Wall Street where stocks fell by the most in months with losses across all 11-sectors of the S&P500.
update 28/08/2020 16:02 On the index level we remain bullish targeting an eventual “pop” above the 6200 area by the ASX200 although the 6000 “magnetic pull” continues, in our opinion the higher the US Indices rally without local participation the greater the possibility that such a rally towards 6300-6500 will become a false breakout, at least short-term. MM has remained fairly aggressively positioned well up the “risk-curve” since March’ s virus led savage sell-off but we reiterate our intention to migrate slightly away from risk if / when such a rally unfolds.
After 6-trading days in a tight 125-point / 2% range the ASX200 gave any complacent investors a quick COVID-19 shot across the bow as the local market tumbled -2.5% on Thursday. The catalyst for the selling was the increasing cases of coronavirus creating serious doubt in many investors’ minds around how quickly the global economy can put the pandemic well and truly in the rear-view mirror. Our current opinion at MM is equities did get slightly ahead of themselves in writing off the virus but we’re better prepared for secondary outbreaks plus of course every week that passes is a week closer to a vaccine Hence MM remains buyers into weakness. Plus, to help us all from an investing perspective we’ve now got a potential road map of sector performance from March until today.
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