The ASX 200 retreated below its new support level at 6350, warning of a bull trap. Declining Money Flow peaks indicate selling pressure. Expect retracement to test support at 6000.
With the Aussie Dollar testing support at 70 US cents, international investors are noticeably skittish, as illustrated by price action in REITs over the past few weeks. Penetration of the rising trendline warns of a correction.
ASX 200 Financials is also retracing, to test its new support level at 6000. Lower peaks on the Money Flow indicator warn of secondary selling pressure.
Banks face headwinds from a declining housing market and the RBNZ call for an additional $8.1 billion in common equity capital (as estimated by S&P Global Ratings).
Materials have started a correction after penetrating its rising trendline. Expect a test of support at 12000. Declining Money Flow peaks warn of strong selling pressure.
I remain cautious on Australian stocks, especially banks, 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 co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
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.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.