ASX 200 Financials Index Archives - the patient investor

September 21, 2024

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.

February 8, 2019

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.

February 1, 2019

ASX 200 Financials test key support ahead of Hayne report

A long-term view of ASX 200 Financials shows the index testing key support at 5300, confirming the selling pressure signaled by bearish divergence on Twiggs Money Flow. Breach of support is likely, especially with the final report of the Royal Commission on Banking due for release on Monday. Breach would offer a target of 4000.

ASX 200 Financials

The Materials index continues in a primary up-trend, assisted by a surge in iron ore prices caused by the temporary shut-down of iron ore mining in Brazil as tailings dams are inspected after the recent disaster.

ASX 200 Materials

Financials is the largest sector in the ASX 200. Respect of 6000 is likely and reversal below 5650 would signal a primary decline, with a target of the 2016 low at 4700.

ASX 200

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.

January 19, 2019January 19, 2019

ASX 200 rallies but LT bearish

The Australian economy is creaking. This is not a time for the Treasurer to concern himself with a balanced budget, laudable as that long-term (LT) goal may be.

Household consumption is slowing, with falling car sales and international travel. Housing investment is about to go over a cliff. This time China is unlikely to rescue the damsel in distress with another record stimulus spend.

It’s time for the government to go big on infrastructure spending. Not school halls or pink batts but real infrastructure like transport and communications investment (5G for example) that will boost long-term GDP growth. We are going to need government (and private) infrastructure to offset the sharp fall in housing investment and prevent a serious contraction.

The ASX 200 rallied off support at 5400 and is headed for a test of resistance at 6000. What could go wrong? This is a bear market and one strong rally is not going to change that. Respect of resistance at 6000 is likely and would warn of another test of primary support at 5400. Breach of support would offer a target of the 2016 low at 4700.

ASX 200

Banks are vulnerable because of the falling housing market. The ASX 200 Financials Index is testing long-term support at 5400. Bullish divergence on the Trend Index indicates buying pressure but I believe this is secondary in nature. The primary trend is down and breach of 5400 would offer a LT target of 4000.

ASX 200 Financials Index

The Resources sector is in far better shape but bearish divergence on the ASX 200 Materials Trend Index warns of LT selling pressure. Reversal below 10500 would confirm a primary down-trend.

ASX 200 Materials

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