Viewpoint: Bullish
The ASX is highly correlated to the UK FTSE and at this stage there appears nothing to worry about although we don’t see any reason to chase a market close to its 2021 highs and we feel is complacently assuming that the pandemic is under control – the logical technical target to again start buying this index is in the 6700 region, or 5% lower.
Again no change to US stocks which have basically gone nowhere on the index level for around 2-months, similar to the ASX sector rotation continues to dominate proceedings, the Dow Jones still remains within 3% of its all-time high as it bounces strongly from sharp weakness last week.
MM has been bearish the crypto for weeks targeting at least a spike under the psychological $30,000 area, a move which unfolded perfectly on cue earlier this week.
As touched on yesterday afternoon CGC has gone into a trading halt as it looks to raise ~$200m to fund a citrus acquisition, not surprisingly as they search for money the company announced that operationally there were no adverse hidden surprises.
The BNPL space was on fire yesterday – they tend to love a lockdown however I think the news that PayPal was raising merchant fees, a move which most importantly crushed the pessimists argument that margins were set to be squeezed is the more important factor.
The ASX200 appeared to fall under the weight of the worsening COVID news with NSW restrictions increased as the Bondi cluster continues to grow.
US equities have again ground higher over the last week, our preference would be for a reasonable pullback in the coming 1-2 months to shake out the weak short-term / momentum traders but sector rotation continues support the index
This portfolio is up ~30% financial year to-date as some sector rotation has helped add solid value in a number of instances. The last week has seen some healthy returns from some of our IT names like Megaport (MP1), Zip (Z1P) and Altium (ALU).
Telstra (TLS) hit a 52 week high this week following another broker upgrade based on an improving outlook for mobile and the corporate restructure which MM has been highlighting since initially buying the stock below $3.00 in our Income Portfolio.
As we cover in a podcast this week with Analyst Michael Clark, Uranium is likely to play a key role as the globe moves towards decarbonization and electrification of energy.
