Posted on by Colin Twiggs

ASX Market Snapshot

Bull/Bear Market Leading Index
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Leading Index is at 54, down from 64 last week, signaling a bear market. Two of four Australian indicators signal risk-off after the 3-month moving average of NAB Forward Orders fell to -2 for May 2026. One of two Chinese indicators signals risk-off, and the ASX 200 Financials Index is testing primary support, so we are on bear watch. ASX Bull/Bear Market Indicator Australian leading indicators carry a 40% weighting in the ASX Leading Index, China 20%, and the US Leading Index the remaining 40%.

Financial Sector

The ASX 200 Financials Index (XFJ) is below its 50-week weighted moving average and testing primary support at 9000. A breach of 9000, confirmed by follow-through below 8900, would flag a primary downtrend — a risk-off signal. ASX 200 Financials Index

China

The OECD Composite Leading Indicator for China lifted to 98.91 in May, from 98.8 in April. Values below 99.0, or a fall of more than 3 points from the preceding peak, signal risk-off.

China: OECD Composite Leading Indicator

China is Australia's largest export market, and the performance of the Chinese economy directly impacts the ASX.

Stock Pricing

ASX stock pricing jumped to 76.72 percent, from 73.92 percent last week. The highest reading was 92.23 percent in August 2025, compared with a low of 67.85 percent in April 2025.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 64% signals a mild bull market, while stock market pricing remains high, increasing the risk of a drawdown.

Acknowledgments

Managing Risk

To find out more, go to Managing Risk on the top menu, or see: