The ASX 200 continues to flirt with primary support at 5650. Money Flow is still comfortably above zero, indicating strong support. But breach of 5650 would signal a primary down-trend, offering a target of 5000.
The two largest sectors are already in a primary down-trend.
ASX 300 Metals & Mining Index broke support at 3500, signaling a decline with a target of 3100. Follow-through below 3400 would confirm.
The ASX 300 Banks Index, in a down-trend since 2015, is currently testing long-term support at 7000. Trend Index peaks below zero warn of selling pressure. Breach would offer a target of 5000.
I have been cautious on Australian stocks, especially banks, for a while, and hold 40% 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.