The ASX 200 is testing resistance at 6100/6150 despite a weakening Australian Dollar and a troubled banking sector. Breakout above 6150 would signal a welcome fresh advance.
Source: S&P Dow Jones Indices
But I remain skeptical because the largest sector, Financials — whose market cap is a third of the entire index — is in trouble. The ASX 300 Banks Index is in a primary down-trend, having broken support at 8000. Retracement that respects the new resistance level at 8000/8100 would confirm a primary down-trend, with a medium-term target of the 2016 low at 7200.
Miners, on the other hand, have recovered. Breakout above 3800 would signal a fresh advance, with medium-term a target of 4200.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.