Technicals | Mar 10 2020
By Michael Gable
It looks like we can blame Russian interference again. The last thing that share markets needed was a plunge in the oil price. All it did was render our 6090 target for the S&P/ASX 200 Index completely useless. I have had to stress during the last few weeks that support levels don't mean much when you get panic selling and consumers start punching on in the toilet paper aisle. Yes, the 2018 low is the next magnet but you don't buy at the first moment you touch a support level, especially in markets like this. You need to observe price action day by day to see whether proper buying is coming back into the market or not.
Buyers stepping up to the plate confirm that it really is a support level, not just a painted line in the middle of the highway. At the moment there is no need to spend the cash. Not yet. Having said all that, it is widely recognised that current events are not in the same league as the GFC which saw bank after bank file for bankruptcy. This means that the eventual bounce would be the greatest opportunity since the GFC. That is, a one in 10-year opportunity. As we highlighted last week, more damage can be done by holding onto the wrong stocks when the market recovers, so it will be very important to jettison the bad companies and then be ready to rotate into more quality when the time is right.
In this week's report we’ve looked at companies which have been holding up well during the last weeks, including NextDC ((NXT)).