ASX 200 Financials broke through resistance at 5900/6000 while bullish divergence on Twiggs Money Flow signals buying pressure. The primary trend remains down but it appears that a base is forming. I remain wary of banks because of declining house prices but you can’t argue with the tape. A higher trough on the next correction would confirm a reversal.
The ASX 200 shows another hanging man candlestick at 6200 on the weekly chart, signaling hesitancy. The primary trend is down and the index is due for a correction soon. A higher trough would reverse the down-trend but there is a lot of uncertainty in global markets.
The Materials sector is retracing to test its new support level at 12500 after meeting resistance at 13000. The primary trend is upward and breach of 12500 is unlikely.
I remain cautious on Australian stocks and hold more than 40% in cash and fixed interest in the Australian Growth portfolio.