The ASX 300 Banks index continues to test support at 7700 after respecting its new resistance level at 8000. Breach of support is likely and would signal another test of primary support at 7300.
The ASX 300 Metals & Mining index broke short-term support at 3600 and is headed for a test of primary support at 3400. A sharp fall on the Trend Index warns of selling pressure.
The ASX 200 is testing medium-term support at 6150. Bearish Divergence on the Trend Index warns of (secondary) selling pressure and breach of 6150 is likely. Expect a correction to test the rising long-term trendline at 6000.
I avoid commercial banks because of higher funding costs, falling credit growth and rising default risk. Also hold few mining stocks because of exposure to volatile commodity markets. I remain cautious on Australian stocks, holding over 30% cash in the Australian Growth portfolio.