Tag: ASX 200 Financials Index

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
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 Market indicator remains at 56%, from 66% four weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index broke through resistance at 10,000, a strong bull signal indicating another primary advance.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing eased to 87.41 percent from 87.50 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

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.

The trimmed mean Price-to-Sales ratio for the ASX 20 is climbing towards its 2021 high.

ASX 20 Trimmed Mean of Price-to-Sales

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
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 Market indicator remains at 56%, from 66% three weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index rallied strongly off support at 9000, confirming the primary uptrend.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing increased to 87.50 percent from 84.90 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

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 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
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 Market indicator remains at 56%, from 66% three weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index respected support at 9000 and remains in a primary uptrend, indicating risk-on.

ASX 200 Financials Index

The OECD China Leading Composite Index declined to 98.8, the second month below the risk-off threshold of 99.0.

OECD: China Leading Composite Index

Stock Pricing

ASX stock pricing increased to 84.90 percent from 82.80 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

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.

The ratio of ASX Stock Market Capitalisation to GDP increased to 1.19, which is 15.5% above the long-term average of 1.03.

ASX Stock Market Capitalisation/GDP

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

RBA Admits Its Mistake

Key Points

  • The RBA raised its cash rate target by 25 basis points to 3.85%.
  • The consumer price index jumped to 3.8% for the 12 months to December 2025.
  • The unemployment rate fell to a seasonally-adjusted 4.1%.
  • The ASX 200 found support at 8800.

The RBA increased its cash rate target by 25 basis points to 3.85%, citing stubborn inflationary pressures and a labor market that is “a little tight.”

The trimmed mean, the RBA’s preferred measure of underlying inflation, increased slightly to 3.3% for the 12 months to December 2025, up from 3.2% in November. However, a jump in the consumer price index to 3.8% from 3.4% in November spooked the central bank into a speedy reversal of its recent accommodative monetary policy.

Australian CPI & Trimmed Mean CPI

The 0.25% rate increase comes less than 12 months after the RBA commenced rate cuts on 19 February last year. The cumulative 75-basis-point rate-cut cycle is the shallowest in the past 35 years, an acknowledgment that it cut too soon.

RBA Cash Rate Target

The seasonally adjusted unemployment rate fell to 4.1% in December from 4.3% in November, indicating a tighter labor market.

Australia: Unemployment

The S&P Global Composite PMI for Australia jumped to 55.7 in January 2025, the highest level in more than 3 years.

S&P Global Composite PMI

Also, the ANZ-Indeed job ads average increased to 4.4% in January 2026, but remains in a long-term downtrend.

Australia: Job Ads

However, aggregate monthly hours worked grew by 1% over the 12 months to December 2025, suggesting low real GDP growth in the year ahead.

Australia: Aggregate Hours Worked

Over the same 12 months, credit and broad money grew at rates of 7.6% and 7.2%, respectively. The wide margin of more than 6.0% between credit/money growth and actual hours worked suggests strong underlying inflationary pressures.

Australia: Credit and Broad Money Growth

The ASX 200 shrugged off the rate increase, respect of support at 8800 signaling another test of 9000.

ASX 200 Index

The large ASX 200 Financials index indicates increased buyer interest, with a higher Trend Index trough.

ASX 200 Financials Index

The ASX 300 Metals & Mining index continues in a strong uptrend, and recovery above 8000 would indicate a fresh advance, with a short-term target of 8750.

ASX 300 Metals & Mining Index

Conclusion

The RBA faces a dilemma.

On the one hand, economic growth is slowing. Aggregate monthly hours worked grew just 1.0% in 2025, while real GDP growth slowed to 0.4% in the third quarter.

Australian Real GDP Growth

On the other hand, inflation is rising due to high government spending, loose monetary policy, and high immigration, crush-loading the housing rental market.

Hiking rates will further slow the economy, but the central bank is already late in tightening monetary policy and will need to hike aggressively to bring inflation back under control.

For now, the stock market shrugged off the rate increase. However, the RBA will need to inflict some pain to achieve its goal.

Acknowledgments

Posted on

ASX Leading Indicators

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, down from 64% three weeks ago. The last decline was due to a fall in the US Bull/Bear indicator, which has a 40% weighting in the ASX index.

ASX Bull-Bear Market Indicator

Four of six indicators from Australia and China indicate risk-on, with the remaining two — NAB Forward Orders and the ASX 200 relative to Gold (in AUD) — signaling risk-off.

The ASX 200 Financials Index (XFJ) closed at a new high above 9750, a strong bull market signal for stocks.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing eased to 90.86, from a high of 92.23 percent last week and a low of 67.85 in April.

ASX Stock Market Value Indicator

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

Conclusion

The ASX bull-bear indicator warns of a bear market, while valuations are now extreme, increasing the risk of a significant drawdown.

Acknowledgments

Posted on

ASX Market Leading Indicators

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 54%, after declining from 64% two weeks ago. Three of six indicators from Australia and China signal risk-off, with a combined weighting of 60% in the ASX Bull-Bear Index. The US Bull-Bear Index, with a 40% weighting, completes the balance.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index (XFJ) retreated below its breakout level at 9250, warning of a correction. However, the index remains in a primary uptrend, signaling risk-on.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing slipped to 87.12 percent from its new high of 87.85 percent last week, but well above the low of 67.85 in April.

ASX Stock Market Value Indicator

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

Conclusion

The ASX is in a mild bear market, while the extreme valuation increases the risk of a significant drawdown.

Acknowledgments

Posted on

ASX Weekly Market Indicators

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator is at 46%, signaling a bear market. Three of the six leading indicators signal risk-off, while the US bull-bear index remains at 40% (with a 40% weighting).

Bull-Bear Market Indicator

The ASX 200 Financials Index (XFJ) rallied to above its 50-week weighted moving average, but remains in a downtrend unless there is a breakout above the recent high at 9250.
ASX 200 Financials Index

Stock Pricing

ASX stock pricing rose to 73.86 percent, compared to 67.85 two weeks ago and a high of 85.83 in February.

Stock Market Value Indicator

The Stock Pricing indicator compares stock prices to long-term sales, earnings, and economic output to gauge market risk. We use z-scores to measure each indicator’s current position relative to its history, with the result expressed in standard deviations from the mean. We then calculate an average for the five readings and convert that to a percentile. The higher that stock market pricing is relative to its historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator signals a bear market, while the risk of a significant drawdown remains high.

Acknowledgments

Posted on

ASX Weekly Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The dial on the left indicates bull or bear market status, while the one on the right reflects stock market drawdown risk.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 54%, with three of six leading indicators signaling risk-off, while the US bull-bear index (a 40% weighting) is at 60%:

Bull-Bear Market Indicator

The ASX 200 continues in a strong downtrend relative to the gold price in Australian Dollars.

ASX 200 Index Relative to Gold in AUD

The ASX 200 Financials Index (XFJ) is retracing to test resistance at 8500, but remains in a primary downtrend.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing increased to the 76.18 percentile compared to 74.05 two weeks ago, and a high of 85.83 in February.

Stock Market Value Indicator

The Stock Pricing indicator compares stock prices to long-term sales, earnings, and economic output to gauge market risk. We use z-scores to measure each indicator’s current position relative to its history, with the result expressed in standard deviations from the mean. We then calculate an average for the five readings and convert that to a percentile. The higher that stock market pricing is relative to its historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 54% indicates a mild bear market.

We are entering a bear market, and the risk of a significant drawdown is high.

Acknowledgments

Posted on

ASX retraces

A tall shadow on the ASX 200 indicates short-term selling pressure and a likely retracement to test its new support level at 8100.

ASX 200 Index

Financials continue their advance, but gradually, with lower Trend Index peaks warning that buying pressure is fading.

ASX 200 Financials Index

The ASX 300 Metals & Mining Index hesitated after its recent rally and will likely re-test short-term support at 5200. Penetration of the descending trendline indicates that the downtrend has weakened, and a correction that respects support at 5000 would confirm that a bottom has formed.

ASX 300 Metals & Mining Index

Iron ore continues its downtrend as Chinese industrial demand weakens. A breach of support at $90 per tonne would confirm our target of $80.

Iron Ore

However, the All Ordinaries Gold Index broke resistance at 8500, signaling another advance with an expected target of 9000.

All Ordinaries Gold Index

Conclusion

The ASX 200 is retracing to test support at 8100. Respect will likely confirm another advance with a target of 8500. Financials and gold miners are strong, but iron ore remains in a downtrend with a long-term target of $80 per tonne.

Posted on

ASX 200 spikes but will it last?

The reason for the upward spike in the ASX 200 is clear. While shortage in iron ore supply may be temporary, while Brazil reviews mine safety, it is sufficient to cause spot prices to jump 20% in the last week.

Iron Ore

Windfall profits are likely to benefit not only the Materials sector but the entire economy over the next few months. The ASX 200 Materials Index ran into resistance at 12500 while a bearish divergence on Money Flow continues to warn of selling pressure.

ASX 200 Materials

The ASX 200 broke resistance at 6000 but remains in a bear market. Reversal below 5650 would signal a primary decline, with a target of the 2016 low at 4700.

ASX 200

ASX 200 Financials Index rallied on release of the Royal Commission on Banking final report. The outcome could have been a lot worse, or so the market seems to think.

ASX 200 Financials

I suspect the bank rally will be short-lived. Credit growth is falling and broad money warns of further contraction.

Australia Credit and Broad Money Growth

House prices are falling and concerns over a slowing economy have caused many to call for further rate cuts. I believe this is short-sighted.

Australia House Prices and Household Debt

One of the biggest threats facing the economy is ballooning household debt. Tighter credit and falling house prices are likely to curb debt growth….provided the RBA doesn’t pour more gasoline on the fire.

I have been cautious on Australian stocks, especially banks, for a while, and hold more than 40% in cash and fixed interest investments in the Australian Growth portfolio.

Powered by WordPress / WordPress Maintenance Service By Website Helper