The two largest sectors in the ASX 200 are both retreating from recent highs.
The ASX 300 Metals & Mining index is testing support at 3750. Breach of support and the rising trendline would warn of a test of primary support at 3400.
The ASX 300 Banks index reversed below its short-term support level at 8000, warning of a test of primary support at 7300.
The banking sector faces the prospect of higher funding costs, falling credit growth and rising default risk and I remain cautious despite penetration of the descending trendline which suggests that a bottom is forming.
The ASX 200 retreated from resistance at 6300. Breach of short-term support at 6200 would warn of a correction.
The primary trend is upward but economic indicators warn of rising headwinds and a potential bear market. I remain cautious, with more than 30% cash in the Australian Growth portfolio.
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.