The ASX 200 broke primary support at 5650, signaling a down-trend. Trend Index peaks at zero warn of selling pressure. Expect retracement to test the new resistance level but respect of 5750 is likely and would confirm a bear market. Target for a primary decline is 5000.
ASX 300 Metals & Mining Index found support at 3400 but declining Trend Index peaks warn of selling pressure. Follow-through below 3400 would confirm a primary down-trend.
A falling housing market and declining construction are dragging the market lower. Banks are the catalyst. Tightening credit standards in response to the Royal Commission and pressure from APRA are slowing lending and likely to lead to a contraction. Broad money growth is slowing sharply.
Unfortunately the alternative is far worse. A blow-off of the credit-fueled property bubble would threaten stability of the financial system.
The ASX 300 Banks Index broke long-term support at 7000, warning of another decline. Trend Index peaks below zero indicate selling pressure. Expect retracement to test the new resistance level but respect is likely and would confirm another primary decline. The long-term target is 5000.
I have been cautious on Australian stocks, especially banks, for a while, and hold 40% cash in the Australian Growth portfolio.