The ASX 300 Banks index overcame resistance at 8000 after retracement successfully respected the new support level. Breach of the descending trendline suggests that a bottom is forming. A higher low on the next correction, followed by a new high, would signal the start of a primary up-trend.
The banking sector remains squeezed by higher funding costs, falling credit growth and rising default risk and I remain cautious.
The ASX 300 Metals & Mining index broke support at 3800, warning of a correction.
The ASX 200 is consolidating below resistance at 6300. Long tails for the last two weeks indicate buying pressure. Breakout is likely and would confirm the primary advance. Target is the October 2007 high at 6750.
Technical signals suggest a primary advance while economic indicators warn of rising headwinds and a potential bear market. So I remain cautious, with more than 30% cash in the Australian Growth portfolio.