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This week…

• Outlook on the Aussie 200 Index

• Aussie 200 will struggle at the 6000 level

• Dr Copper & Iron Ore relative to the Aus200

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General Advice & Risk Warning

Please note that any advice given by Invast staff is deemed to be GENERAL advice, as the information or advice given

does not take into account your particular objectives, financial situation or needs.

Therefore at all times you should consider the appropriateness of the advice before you act further.

CFDs and Forex are leveraged products and carry a high level of risk and are not suitable for everyone. You can lose

more than your initial deposit so you should ensure CFD and Forex trading meets your investment objectives. We

recommend you seek independent advice. Strategies and charts used in this presentation are for example only. You are

reminded that past performance is not indicative of future performance.

Invast Financial Services is regulated by ASIC. It's important for you to read and consider the relevant Product

Disclosure Statement and Financial Services Guide which contains details of our fees and charges before you decide

whether or not to acquire any financial products. These documents are available at www.invast.com.au

Invast Financial Services Pty Ltd ABN: 48 162 400 035. Australian Financial Services Licence No.438 283

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This week we look at the following topics:

• Outlook on the Aussie 200 Index

• Aussie 200 will struggle at the 6000 level

• Dr Copper & Iron Ore relative to the Aus200

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Dear Readers,

Our analysis this year has so far touched on the 2015broader Outlook Guide and in February we focused onAustralian listed companies. The new push this year is onindividual stocks, powered by Invast’s new DMA platform.The benefit of this platform is that it provides direct marketaccess into several global exchanges.

Our focus in March will be to analyse these major exchanges,as represented by key indices. Indices are important tounderstand even if you trade underlying stocks. All of theindices that we touch on in March are traded throughInvast’s MT4 platform, which remains a powerful trading tooland part of the overall Invast toolbox for traders.

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In April we plan to focus on individual stocks across these indices and we will groupthese stocks into various trading baskets across four individual weeks. But before thatcan occur, we need to study and analyse to see where each index is currently trending.

Our analysis will be broken up as follows:

Week commencing 2 March 2015: Outlook for the German DAX30 Week commencing 9 March 2015: Outlook for the UK FTSE100 Week commencing 16 March 2015: Outlook for the US S&P500 Week commencing 23 March 2015: Outlook for the Australian ASX200 Week commencing 30 March 2015: Outlook for the Hong Kong HSI50 Week commencing 23 March 2015: Outlook for the Australian ASX200

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We wrote last week on the S&P500 and the inevitable decision that the US FederalReserve must make in increasing interest rates. Last week’s FOMC decision did intheory very much reaffirm this but commentary from Yellen was enough to set themarket alight with excitement. Our view has been medium-term since the beginning ofthe year. There will be the odd comment here and there but we find it very difficult tosee how the world’s largest economy can ignore the record low interest rate policy ithas in place as the economy starts to report some very encouraging levels of corporateprofit and employment growth. Nothing has really changed our view, perhaps onlytiming. We don’t think rates will rise in the first half of this year, based on Yellen’scomments last week, but we do still think that a rate rise is coming in the second halfof the year. When this occurs, the focus on direction for 2016 and beyond willconsume the market.

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The interest rate increase will come and go just like the tapering of quantitative easing.The market will get over it, after an initial over-reaction. The problem for US stocks isthat they have been trending and rallying for so long, fuelled by cheap money that thereversal in this policy will be somewhat of an unknown area for market valuationswhen viewed in the context of the past two decades. The market has become so usedto cheap money ever since the tech crazy period early this decade that an upwarddirection, even though rates are still low, will start to generate discussion of a newparadigm in investment markets. We’re not there just yet, but we’re pretty sure we willbe by the end of this year.

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Our focus this week is on the ASX200 index. We probably discuss this index more thanany other due to our home bias being an Australian registered and regulated financialinstitution. For those of you who don’t read our blog section, we’ve summarise ourview on the ASX200 particularly since the begging of the year as follows:

Is the Aussie market rally sustainable? Published on February 6, 2015

Our key conviction over the past few months has been that the Australian market hasstrong correlation with activity and sentiment in China, but there seems to be a slightlysense of decoupling in that relationship over recent months. Our direct call for theAUS200 in our outlook guide back in January was that “…We expect to see furtherconsolidation before a move towards the 6000 level sometime later this year…”

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This blog post is very much a reinforcement of that view. We have actually beenexpecting this rally. The three key factors discussed above will continue to providestimulus for Australia, as part of the wider Asian region. Things are finally starting topick up, but we caution against buying mining companies like BHP too early. There is noneed to rush and more bad news likely to emerge before the situation improves.

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ASX Unlikely to Rally Beyond 6000. Published on February 27, 2015

It seems like that push towards 6000 is currently in play. As I look through the resultsover the past month, I see solid earnings and an overall positive mood across corporateAustralia. BUT…the resource and materials sector of the economy is looking veryvulnerable. The market has welcomed the results of BHP and Rio Tinto but I think theyare lousy and disappointing. Commodity prices are not improving from their depressedlevels and whether we like it or not, the ASX200 index can only convincingly push higherif commodity prices are to recover.

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My view on the ASX200 index is fairly contrarian, I see that many analysts are nowupgrading their forecasts. I think this is foolish. To me the facts are important and I’m abig believer of the Aussie market’s ability to rise, just not above 6000 in a period wherecommodity prices are depressed. The last time we saw 6000 plus on the ASX200 indexwas before the 2009 global financial crisis and that was a period of time wherecommodity prices like oil, copper, iron ore and coal were all hitting record high levels.Today, they are all very depressed.

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ASX200 Looking Vulnerable Here. Published on March 6, 2015

This all means that the ASX200 is vulnerable for a pullback. I had a very long andinteresting discussion with an experienced investor this week about Woolworths. Heholds a very significant portion of his portfolio in the stock. We spoke about the currenttrading situation and how he thinks the non-food part of the business is traveling.Being an owner of the stock, he couldn’t find many reasons to be optimistic. It’s notnecessarily a problem with the business, but a reflection of the economic environmentthat Australia finds itself in.

As the reporting season winds down and companies finish paying their dividends, I seea lack of support for the market – other than the fact that interest rates might fallagain in the next few months. Even if that was to occur, the ASX200 as an index needscommodity stocks to start rising and the trend in commodities is still very bearish.

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With that in mind, I still find it difficult to see how the ASX200 can push through the6000 level and I would expect to see a small pullback between now and the next RBAmeeting, with consolidation around the 5800 level for the next few months.

The reason for us highlighting these comments is to show that we have been on themark with regard to the trend on the ASX200 index. There is nothing new in our viewthis week, we thought it would be important to discuss the ASX200 along with all theother global peers which we are reviewing this month. Our key calls as published onthe Invast blog section of the website have played out perfectly. See the abovecomments against the index chart below.

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Image: AUS200 four- hourly chart as quoted by Invast MT4 platform

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We still see the market struggling to rise through the 6000 level due to the followingfactors:

1) Australia is seen as a resource market and commodity prices are still very depressed.2) Of these key commodities, iron ore is the most statistically significant and we are yetto see a recovery here. In fact, prices are still falling.3) The Australian market rally has been fuelled by banks and financials, which are nowover represented in the overall index when compared to global peers. For example,four out of the top five stocks in Australia are now all banks. This is an anomaly whencompared to other developed markets like the United States and Germany.4) The full impact from the falling Australian dollar and lower energy prices has not yetflowed through to boost corporate earnings. When it does later this year, there mightbe more headroom for the market.

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Image: AUS200 daily chart as quoted by Invast MT4 platform

Our preference since the beginning of the year has been to buy the index when it consolidates around the 5800level where there is good support now and sell it as it attempts to scale the 6000 level where it has now beenrejected several times.

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Headlines last week around Fortescue’s debt woes and the bottoming out of the ironore prices could be potential signs of a bottom in the commodities cycle. We will bewatching developments very closely to see if this transpires. It is surprising to see thatthe Chinese market has bottomed over the past year and posted a solid bounce fromits lows, contrary to expectations. But this has not helped fuel commodity prices.

What we really need to see is he copper price break out of the current downwardspiral and snap back towards the US$3/lb range. Without US$3/lb plus copper, wedon’t think the ASX200 can rise and stay above the 6000 level. The two areintertwined.

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Image: Copper futures four-hourly chart as quoted by Invast MT4 platform

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Image: HK50 daily price chart as quoted by Invast MT4 platform

It’s also worth noting that the trading pattern around the ASX200 is also very similar to that of the Hang Seng inHong Kong which we will be writing about last week in our final week for the March index reviews. We will providea glimpse of our thoughts in the upcoming webinar, with details below.

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Outlook on major global indices – a correction coming?

Invast Insights chief editor and contributing author Peter Esho will summarise his outlook on the major globalindices in March. Esho will document his findings based on the performance of key stocks across these indicesand where he believes the big opportunities lie throughout this year. His presentation will focus on thefollowing 5 themes:

Outlook on the German DAX30Outlook on the UK FTSE100Outlook on the US S&P500Outlook on the Australian ASX200Outlook on the Hong Kong HSI50

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Esho is a regular contributor on CNBC, Bloomberg and host of ‘Your Money Your Call’.His webinar will cover both the fundamental and technical outlook on these keythemes and a basic introduction to Invast’s new DMA CFD product offering whichcomplements MT4 and other services. This webinar is expected to fill fast. Q&A will beopen straight after the presentation. Click here to register.

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Go to www.invast.com.au/insights to get a complimentary 4 week trial and receive the latest insights as they are published to our live clients.

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DisclaimerPlease note that you are receiving this report complimentary from Invast Financial Services Pty Ltd(AFSL 438 283). Invast staff members may from time to time purchase securities which areincluded in this or future reports. The authors of this report may or may not be holding a positionin the securities mentioned. Please note that the information contained in this report and Invast'swebsite is of a general nature only, and does not take into account your personal circumstances,financial situation or needs. You are strongly recommended to seek professional advice beforeopening an account with us.

General Disclaimer: This newsletter contains confidential information and is intended only for theperson who downloaded it. You should not disseminate, distribute or copy this newsletter. Invastdoes not accept liability for any errors or omissions in the contents of this newsletter which ariseas a result of downloading this newsletter. This newsletter is provided for informational purposesand should not be construed as a solicitation or offer to buy or sell any financial product. InvastFinancial Services Pty Ltd is regulated by ASIC (AFSL 438 283 | ABN 48 162 400 035).

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Risk Warning: It's important for you to read and consider the relevant Product DisclosureStatement, and any other relevant Invast Financial Services Pty Ltd documents before you decidewhether or not to acquire any financial products listed in this email. Our Financial Services Guidecontains details of our fees and charges. All these documents are available here on our website, oryou can call us on +612 8036 7555. CFDs and Foreign Exchange are leveraged products and carry ahigh level of risk and you can lose more than your initial deposit so you should ensure CFD andForeign Exchange trading meets your personal circumstances.

General Advice Warning: Being general advice, this newsletter does not take account of yourobjectives, financial situation or needs. Before acting on this general advice you should thereforeconsider the appropriateness of the advice having regard to your situation. We recommend youobtain financial, legal and taxation advice before making any financial investment decision.

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