The ASX 300 Metals & Mining index continues to test support at 3750. Breach of support and the rising trendline would warn of a correction to 3400.
The ASX 300 Banks index recovered above 8000, the false break suggesting another rally, targeting 8500.
I remain wary of banks, however, because of higher funding costs, falling credit growth and rising default risk .
The ASX 200 continues to test resistance at 6300. Rising Twiggs Money Flow troughs signal buying pressure. Breakout above 6300 would present a short-term target of 6500.
The primary trend is upward but economic indicators and the potential impact of a US-China trade war make me cautious. I hold 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 founded PVT Capital (AFSL number 546090), which provides income and growth strategies to wholesale clients.
Colin also co-founded Incredible Charts and writes the popular Patient Investor newsletter.
Using a top-down approach, Colin identifies macro trends in the global economy and then combines fundamental and technical analysis to evaluate opportunities in sectors that stand to benefit.
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.