Viewpoint: Bullish
US stocks struggled to maintain their recent bullish momentum last week as tech and growth names struggled in the face of the bond yield headwind but considering the ongoing surge in yields we felt stocks put in a solid performance and another test of all-time highs wouldn’t surprise.
The ASX200 again outperformed most global indices last week managing to rally while others struggled under the weight of rising bond yields and generally negative news from Ukraine. Seasonally we’re coming into the 2nd best month of the year, just behind December, through 2022 MM has maintained a net bullish & “buy the dip” stance which has worked nicely, and very short-term the market still…
We are buying PDN using a 73c limit price
MIN is historically the more volatile of today’s 4 which is understandable as it has a major lithium / nickel component and a higher cost of production for iron ore, a bounce feels very likely and while we have considered the stock a few times in 2022 at this stage of the cycle we prefer to stay with the bigger names in the sector.
We have already touched on The Big Australian earlier in the week and our stance remains the same – we are bullish short-term feeling it’s too late to chase recent strength while also being too early to take profit, a pop to fresh highs is feeling increasingly likely and may see us reduce / sell our exposure.
Iron ore has been riding a huge roller coaster style ride since mid-2021 as investors attempt to second guess Chinas demand as the world exits COVID just as the world’s second largest economy continues to try and live without the virus having just sent Shanghai, a city of 25 million people, into a 2 stage lockdown as they attempt to balance the economy v the virus – this is the countries largest lockdown as Omicron makes a mockery of the governments zero-COVID policy.
Netflix has weighed heavily on the tech sector having more than halved from its late 2021 high as investors clearly decided that the company’s performance didn’t warrant the huge valuation it had previously enjoyed. However after plunging so far we believe the risk / reward now favours the aggressive trader under the $US380 level – MM can see a test of $US450 in the coming weeks / months.
US stocks surrendered a further portion of their recent recovery overnight as a pullback in bond yields and oil prices sent the value names lower although losses were fairly broad based as aggressive selling hit the market into the close – similar to our market yesterday. After bouncing strongly through March we wouldn’t be surprised to see US equities consolidate for 1-2 weeks before making another attempt on the upside.
Yesterday we waved goodbye to a volatile Q1 which saw the ASX200 initially drop -9.2% in January before slowly but surely recovering all of the losses before managing to end the quarter slightly higher. The highlight of the last 3-months would probably go to the explosive rise in bond yields but there were a few rivals for the mantle including surging commodity prices courtesy of Russia’s invasion of Ukraine…
Apple has continued to outperform most of its peers in 2022 and now sits within striking distance of Januarys all-time high, a test of $US200 wouldn’t surprise us if we see tech continue its recent bounce after being savaged by soaring bond yields over the last 6-months.
