Viewpoint: Bullish
MM recently went long the Australian ATEC ETF looking to profit from the abovementioned rotation into the tech sector which is unfolding through global equity markets, at this stage we believe it’s less than half way through its recovery and new all-time highs are on the horizon in the approaching months.
The ASX200 again posted all-time highs last week as a little profit taking in the banks was more than offset by broad based buying across the market led by the IT Sector as bond yields slipped lower removing the headwind which has been suppressing the growth stocks through most of 2021 – our focus today will be on these very same bond yields which have dictated the sector rotation over the last 6-months.
Hearing implant company COH has been in a holding pattern for most of 2021 but we believe it will follow any sector strength to make all-time highs later in 2021.
Pathology and diagnostics business SHL remains on track to initially test $40, similar to our view in mid-April. We believe it’s a case of when not if the shares “pop” on the upside.
Sleep disorder company RMD has worried the market with regard to potential supply disruptions as the world struggles to meet elevated demand for products with supply that’s still somewhat constrained.
When a well owned stock that investors simply think ‘can’t go down’ experiences some less positive news flow such was the case with CSL around plasma collection volumes, it’s easy to see why the stock falls which was the case with CSL during 2020.
As we’ve said falling bond yields is the catalyst for the current reinvigoration of the growth sector, there are another couple of important points to recognise
The majority of 2021 has seen a the fairly aggressive rotation out of the growth stocks into the old fashioned value end of town i.e. sell Healthcare & IT to buy Banks & Resources with the catalyst being soaring bond yields as the global economy recovered from the pandemic.
As we mentioned earlier US bond yields are making fresh multi-week lows as they look through the short-term inflation data and in our opinion recognise two important factors
US and European stocks experienced a very quiet session considering the much awaited inflation data crossed our screens, things may feel a touch “tired” but historically it’s a bad bet to call stocks lower in weeks when they’re making fresh all-time highs.
