Viewpoint: Bullish
CBA is clearly bullish after making fresh all-time highs yesterday, we can see some rotation between $95 and $100 over the coming weeks but MM sees no reason not to be long, the “easy” money may be in the rear view mirror but a forecasted yield above 3% which is growing plus the strong chance of additional capital management we would expect to see plenty of buyers surface into any future dips.
The picture from the US banks is not surprisingly similar i.e. they are bullish with the next pullback likely to present an excellent risk / reward buying opportunity however right now patience feels appropriate.
Yesterday saw the Commonwealth Bank (CBA) reach a fresh all-time high, less than 1% below the psychological $100 level and while I’m sorry to cover the banks again I know virtually all of MM’s subscribers have significant exposure to the sector hence its important you are fully across our view towards the ASX’s most influential sector – the “Big Four” make up over 20% of the index with CBA the markets largest stock.
The $US Index continues to test its 2021 lows although the $A struggles to break above 78c, overnight the commodities bounced on the declining $US with copper recovering +1.2% and precious metals marginally higher.
Diversified miner S32 has been on our shopping list for a few weeks and after slipping more than 9% our “buy area” looks very achievable in May / June. We are keen buyers into weakness below $2.70, an overall correction which coincides with our thoughts towards the likes of BHP and RIO.
Australia’s major gold producer NCM has failed to fully embrace the recovery by the precious metal, not a huge surprise considering how often its disappointed the faithful but we feel this is the time to be overweight the stock and sector.
Z1P +0.85%: announced the acquisition of 2 small players for around $180m today. The acquisition of Twisto will only bump up the TTV run rate by around 3%, however it does provide Zip with licences into all EU member states along with a 1m customer foothold.
MM has leaned on Amazon.com (AMZN US) on a number of occasions to help with our technical viewpoint towards stocks and in particular the tech sector.
The VIX index remains extremely low considering the gyrations stocks have experienced over the last few weeks plus of course it is May! However at this stage it’s clearly holding on tightly to the elastic band which snaps it back towards the 20 region whenever equities stabilise.
Bond markets have been trading sideways since late February, no great surprise considering the aggressive rally they experienced at the start of the year.
