After a false break above 8100 the ASX 300 Banks index completed a bull trap with reversal below 7900. Expect a test of primary support at 7300.
Resources stocks continued their correction, with the ASX 300 Metals & Mining index finding short-term support at 3600. Follow-through is likely and would test primary support at 3400, with fears of a US-China trade war undermining commodity prices.
The ASX 200 retreated below its new support level at 6300. Political upheaval may have contributed but penetration of the rising trendline would warn of a correction (already signaled by bearish Divergence on the Trend Index).
I remain wary of banks because of higher funding costs, falling credit growth and rising default risk and cautious on Australian stocks, holding over 30% cash in the Australian Growth portfolio.