More stock market bullishness

From the AFR:

It’s worth noting that Australian equities have lagged behind the US and European bourses in recent years, due to the end of the mining boom – a large portion of the ASX200 index is made up of mining stocks.

However, a lot of that bad news is now priced in, and we see plenty of catch-up potential on the back of an improving macro environment in 2015 – lower interest rates, energy prices, and AUD are all providing a tailwind to the miners and many other ASX-listed stocks.

Our two largest export markets (China and Japan) are also on the mend.

We can make plenty of fundamental arguments for Australian equities right now, but the only argument that actually matters is price, and price is telling us to be long the ASX200.

73b47404-b7cb-11e4-9252-9d39134a5514_lie chart one

I expect the index to at least reach the first two targets of 6000 and 6400 (T1, T2) before the end of the year, and will be watching price action and volume closely at those levels.

That’s what we macro specialists like to call poppycock. $50 and below iron ore is not priced in. The fundamental arguments for an Australian stock bull market lie somewhere between are zero and none.

But, as we know, as the liquidity flows, stocks go up. Or, put another way, as the yield deck falls, the price of equity rises.

The targets look achievable to me but make no mistake, there is nothing underpinning it.

Comments

    • Though I should say I am also quite bullish on Oz equities, in spite of the recent run-up. I suspect the XFJ (half the ASX) will need to go completely full retard before the eventual, final turn.

      • No as usual when someone gets offended at nothing all that happens is they highlight what they found offensive to a lot more people who don’t.

        How about we find behaviour offensive instead of language, and how about we actually DO something about offensive behaviour instead of just hoping we all hold-hands and sing?

        I never tolerate deliberately offensive behaviour and I’m a tiny tiny tiny minority? Offensive language? Pffft the minuscule foray into that oceanic in depth and breadth literary resource known as the English Oxford Dictionary I find much more offensive than any single word therein contained….

      • What has the OED ever done to you? It’s f’ken fantastic!

        (And partly the work of the mentally infirm)

      • I suspect the XFJ (half the ASX) will need to go completely full retard before the eventual, final turn.

        I am increasingly of this view as well. We’re going to blow off right into the super cycle bust.

        And this is why I still have exposure to Aussie equities, not much, but some, and none of it resources.

        Question is, can I time my exit.

      • Yeah! this is good….. got 100% of my super riding this storm into the ASX-6000 club !! remind me to pull the pin at 6400…

      • “this is why I still have exposure to Aussie equities, not much, but some, and none of it resources.”

        really? nothing in resources? no gold no oil ?

    • It wont take too much to see a mildly positive set of benchmarks emerge for the Aussie dollar in coming weeks and months. It is important to note that the AUD did fall a smashing 34 US cents from its peak level in 2011 so getting bearish after such a move is a mugs game