The ASX 300 Banks index continues to test support at 7700. Declining Trend Index warns of medium-term selling pressure. Breach of support is likely and would signal a test of primary support at 7300.
The ASX 300 Metals & Mining index is also headed for a test of primary support, at 3400. A Trend Index peak at/below zero would warn of rising selling pressure and a primary down-trend.
Commodities are already in a primary down-trend but Australian stocks are partially cushioned by a weakening Aussie Dollar.
The ASX 200 found medium-term support at 6150 but this unlikely to hold. Bearish Divergence on the Trend Index warns of medium-term selling pressure. Expect a correction to test the rising long-term trendline at 6000.
I remain cautious on Australian stocks, holding over 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.