The ASX200 soared to its highest level since February as over 80% of the market rallied led by the unusual combination of resources and IT with the later the standout led by Afterpay which gained 5% to breach $120 for the first time ever – its now incredibly a bigger business than both Coles (COL) and Woodside (WPL). Throughout Thursday the market rallied without taking a meaningful backward step, as we’ve trotted out almost at nauseam recently this time of year regularly delivers a dearth of sellers.
The ASX200’s post COVID rally continues in earnest with the local market breaking above both its March high and the psychological 6500 level during yesterday’s session. The markets now rallied well over 10% in the last 3-weeks as stocks continue to embrace the US election, positive vaccine development and ongoing huge monetary & fiscal stimulus. Last week I wrote “My “Gut Feel” is the buying in the banks and resources will continue but the aggressive selling of some tech names will abate pushing the underlying index higher.” – this has been on the money recently and we see no reason to doubt a further extension of this new trend into Christmas but after an almost vertical style rally some decent pullbacks or at least consolidation is inevitable.
Yesterday wasn’t the ASX’s proudest day with the trading system failing for almost 6-hours - a lot of not-too subtle lines circulating around the office yesterday however it seems the ASX has a glitch like this every 4 years – last time it happened was in 2016 and 2012 before that – fingers crossed for today. This particular ASX technical upgrade reminded me of what Apple regularly run through my phone, it never works as well afterwards. All we know for sure is the market opened strongly coming within a whisker of 6500 by 10.24am before the curtain fell, the futures implied stocks would have drifted for most of the day before finishing close to their highs but only a crystal ball will know the exact answer.
This morning the SPI futures are calling the ASX200 to open up around 50-points after a strong performance on Wall Street which saw the likes of BHP rally ~2% in the US. Again the “recovery story” looks set to lead the pack after the Energy Sector surged almost 4% on Friday night compared to the IT sector which gained less than 1%, investors remain comfortable to look through the current awful COVID picture in the US following Pfizer’s vaccine announcement. With earnings turning higher and a global reopening on the horizon the optimists are in in charge at present and we see no reason to the fight the uptrend until further notice.
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 ASX200’s post COVID rally continues in earnest with the local market breaking above both its March high and the psychological 6500 level during yesterday’s session. The markets now rallied well over 10% in the last 3-weeks as stocks continue to embrace the US election, positive vaccine development and ongoing huge monetary & fiscal stimulus. Last week I wrote “My “Gut Feel” is the buying in the banks and resources will continue but the aggressive selling of some tech names will abate pushing the underlying index higher.” – this has been on the money recently and we see no reason to doubt a further extension of this new trend into Christmas but after an almost vertical style rally some decent pullbacks or at least consolidation is inevitable.
Yesterday wasn’t the ASX’s proudest day with the trading system failing for almost 6-hours - a lot of not-too subtle lines circulating around the office yesterday however it seems the ASX has a glitch like this every 4 years – last time it happened was in 2016 and 2012 before that – fingers crossed for today. This particular ASX technical upgrade reminded me of what Apple regularly run through my phone, it never works as well afterwards. All we know for sure is the market opened strongly coming within a whisker of 6500 by 10.24am before the curtain fell, the futures implied stocks would have drifted for most of the day before finishing close to their highs but only a crystal ball will know the exact answer.
This morning the SPI futures are calling the ASX200 to open up around 50-points after a strong performance on Wall Street which saw the likes of BHP rally ~2% in the US. Again the “recovery story” looks set to lead the pack after the Energy Sector surged almost 4% on Friday night compared to the IT sector which gained less than 1%, investors remain comfortable to look through the current awful COVID picture in the US following Pfizer’s vaccine announcement. With earnings turning higher and a global reopening on the horizon the optimists are in in charge at present and we see no reason to the fight the uptrend until further notice.
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.
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