The ASX 200 has been buoyed by a temporary spike in iron ore prices. Materials (comprising 18.5% of the main index) broke through resistance at 12500, signaling a primary advance. A higher trough on Twiggs Money Flow indicates buying pressure.
The ASX 200 encountered resistance at 6100 but the rally could go so far as to test the 2018 high of 6350. We remain in a bear market. Only a correction that successfully forms a higher trough would reverse that. Expect another test of the former primary support level at 5650.
Financials, the largest ASX 200 sector (31.4%), remains in a primary down-trend. Declining house prices are likely to drag the index lower. Respect of resistance at 5900 would strengthen the bear signal, while breach of 5300 would signal another decline.
I have been cautious on Australian stocks, especially banks, for a while, and hold more than 40% in cash and fixed interest investments in the Australian Growth portfolio.