The gauge on the left indicates bull or bear market status, while the right reflects stock market drawdown risk.
Bull/Bear Market
The ASX Bull-Bear Market indicator is unchanged at 54%, signaling a mild bear market.
Three of six indicators from Australia and China (our largest trading partner) signal risk-off. These have a combined weighting of 60% in the ASX Bull-Bear Index. The US Bull-Bear Index, also unchanged, makes up the remaining 40%.
The ASX 200 Financials index ($XFJ) threatens to break out above 9320 on the weekly chart, which would signal a new uptrend. The indicator would switch to risk-on, reversing its bear signal from March 7, 2025.
However, China’s NBS manufacturing PMI fell sharply to 49.0 in April. Any further decrease would trigger a recession signal.
Australian private dwelling approvals are also weakening. A reversal of the 3-month MA below the red signal line would also signal risk-off.
Stock Pricing
ASX stock pricing eased slightly, to 79.65 percent, a sizable gain from 67.85 six weeks ago, but well below the high of 85.83 in February 2025.
Conclusion
The ASX signals a mild bear market, while the risk of a significant drawdown remains high.
Acknowledgments
- NAB Monthly Business Survey: April 2025
- ABS: Private Dwelling Approvals
- Trading Economics: China Business Indicators
- Morningstar: ASX All Ords & ASX 20 Statistics
- Market Index: ASX Statistics
- ABS: National Accounts
- ASX: Historical Market Statistics
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.