Financials are still weak. The ASX 300 Banks rally appears short-lived, posting a red candle for the week. Expect another test of support at 7200; breach would test primary support at 6750.
The ASX 200 REITs index recovered above support at 1600. False breaks on both the bull and bear side indicate hesitancy but declining peaks on the Trend Index warn of long-term selling pressure.
The ASX 300 Metals & Mining index is more bullish, having broken resistance at 4450. Expect retracement to test the new support level; respect would confirm the target of 4800.
Talk of an imminent trade deal lifted iron ore above previous support at 90. Expect another test of primary support at 80, but respect would confirm that a base is forming above 80.
A bearish financial sector is holding the ASX 200 back. Follow-through above recent weekly highs would signal another advance, while reversal below 6600 would test primary support at 6400. Further consolidation between 6400 and 6800 is just as likely given the gradual decline on the Trend Index.
We are avoiding highly-priced growth stocks and focusing on defensive and contra-cyclical sectors because of our bearish outlook for the Australian and global economies.