ASX awaits bear market confirmation

The ASX 200 is testing the former band of primary support between 5650 and 5750. Respect is likely and would confirm a bear market for Australian stocks. Target for a primary decline is 5000.

ASX 200

ASX 300 Metals & Mining Index is testing primary support at 3400. Declining Trend Index peaks warn of selling pressure. Breach of 3400 would confirm a primary down-trend, strengthening the bear signal.

ASX 300 Metals & Mining

House prices are falling but this has not yet had an impact on the record high ratio of household debt to disposable income. Wages growth is slow and it will take a long time for debt ratios to return to saner levels. Expect the housing bear market to last for a similar length of time unless the RBA is desperate enough to make further rate cuts.

RBA: Credit & Broad Money

Bank performance is closely aligned with the housing market. The ASX 300 Banks Index is testing long-term support at 7000. Declining Trend Index peaks warn of selling pressure. Breach of support at 7000 is likely to lead to another decline, with a long-term target of 5000.

ASX 300 Banks Index

I have been cautious on Australian stocks, especially banks, for a while, and hold 40% cash in the Australian Growth portfolio.