Weak red candles on the ASX 200 Financials index indicate support at 5900/6000. Rising troughs on Twiggs Money Flow flag buying pressure. Falling housing prices have not yet made a dent in investor confidence. Penetration of medium-term support at 5800 would warn of another test of primary support at 5300 but a rally is more likely.
Materials respected their new support level at 12500, benefiting from high iron ore prices.
The ASX 200 is consolidating at 6200 but continuation to test resistance at 6300/6350 is likely.
Expect stubborn resistance at 6350, followed by a correction.
I remain cautious on Australian stocks and hold more than 40% in cash and fixed interest 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.