View from my Broker
The ASX 200 is pushing its way through 5400 as expected, but following our break we see a more substantial rally into year-end developing. Short-term we see risks of a small pullback, however by year-end we see 6000 being hit.
•How? A major revival in the resources sector (which is currently underway) AND banks rebounding. With my long-held bullish view on bonds changing, so too is my bearish view on banks.
•I am not long-term bullish on our local bank stocks – rather a 6 to 9 month view. The underlying issues regarding property values, over supply, bad debts remain, but for the near-term they have played out. As a result a substantial rebound can occur and together with gains in resources and industrials the ASX 200 can hit 6000.
•The ASX 200 has made literally zero progress since the beginning of 2010 and is due for a substantial rally. When looking at the weekly chart top left, the current base formation is now of 12 month duration. There were only two other similar set-ups since the GFC – 2009 and 2013 – both led to 700+ point rallies.
•From 5400 that suggests 6100 – but on the conservative side we will target 6000
•This is a very strong view we hold for the local market and not just a mere passing observation. We will be using dips over the coming weeks to build our prop book positions to benefit from what we expect to be a very strong trend.
•While we haven’t checked as of yet, we suspect that fund managers are still relatively underweight local equities with Brexit creating an element of fear and the sharp rebound following gave little opportunity for investors to get set.
•5350/5300 is as far as any pullback is likely to reach.
If you are interested , contact me and I will refer you to an awesome financial planner!!