Bearish outlook for the ASX

Iron ore rallied slightly during the week. But this is a bear market. Expect resistance at $60 to hold and breach of support at $50 is likely, signaling another decline.

Iron Ore

The ASX 300 Metals & Mining index is testing support at 2750. Breach is likely and would signal a primary down-trend.

ASX 300 Metals & Mining

Banks are also under pressure, with the ASX 300 Banks index consolidating between 8000 and 8500. Breach of 8000 is likely and would confirm the primary down-trend.

ASX 300 Banks

The ASX 200 displays a broadening wedge consolidation. A failed down-swing, recovering above 5800 without reaching the lower border, would be a bullish sign. But this seems unlikely with a bearish outlook for the two largest sectors.

ASX 200

2 Replies to “Bearish outlook for the ASX”

  1. Article title: Got to disagree, Colin… sorry

    This shows strong signs of ‘medium-term -bottom-area-formation, in my view- technically and fundamentally

    Large falls from tops recently in IO, Miners and the Banks = points to medium-term over-sold ; Twiggs money flow = at negative levels ( ASX 200 at very low levels ) points to ‘nearer-the-bottom’.

    Fundamentally – Relative value and outlook:
    I would offer that Aussie shares offer much better comparative value than overseas ( at new highs) markets, given outlooks – politically, economically and financially. Yes, we know about the housing/banking/indebted consumer/low wage growth risks ; China uncertainty/ etc/etc ( other negatives)

    Given the charts you kindly presented on S&P ( bubble ??), the national debt there, their grossly expensive valuations and the uncertainty – politically, economically and financially ( winding down the Fed’s balance sheet ), risk-adjusted and technically I’d rather be invested here than there.

    I believe that “Neutral to mildly bullish” might be a better article headline- from a technical perspective, also.

    Thanks, and all the best

  2. Thanks Martha,
    I appreciate the alternative view.
    But I will stick with a bearish outlook for the ASX and bullish for the US. The best market to invest in is a bull market (US) and the worst is a bear market (ASX). Market’s don’t generally reverse on valuation but on emotion. Overvalued stocks tend to rise in price, and undervalued stocks fall in price, until some external shock shifts the dominant emotion from euphoria to fear, or exhaustion of fear-driven selling gradually shifts the market to optimism.

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