ASX 200 Archives - Page 7 of 36 - the patient investor %

March 16, 2019

ASX 200 approaching resistance

A sign of increased risk aversion is the stellar performance of the A-REIT index. AREITs are trading at substantial premiums to net asset value as investors bid up stocks with stable cash flows.

ASX 200: Real Estate

Financials are retracing to test their new support level at 5900/6000. Calls from the RBNZ for the big four to increase their capital haven’t helped.

ASX 200 Financials

Materials are also retracing but continue their up-trend. Though the iron ore windfall is unlikely to last.

ASX 200 Materials

The ASX 200 is heading for a test of resistance at 6300/6350. Expect stubborn resistance, leading to a correction.

ASX 200

I remain cautious on Australian stocks and hold more than 40% in cash and fixed interest in the Australian Growth portfolio.

Colin Twiggs

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.

March 8, 2019March 8, 2019

ASX 200 gravestone

Australian housing prices are falling.

Australia: Housing Prices

Fueled by declining credit growth.

Australia: Housing Credit growth

With falling contribution to GDP growth from dwelling investment, and mining investment shrinking….

Australia: GDP Contribution

GDP growth is expected to weaken further.

Australia: GDP growth

The gravestone candlestick on the ASX 200 weekly chart warns of selling pressure. The primary trend is down and the index unlikely to break through resistance at 6300. Expect a correction to test support at 5650; breach would warn of another decline.

ASX 200

I remain cautious on Australian stocks and hold more than 40% in cash and fixed interest in the Australian Growth portfolio.

Colin Twiggs

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.

March 2, 2019

ASX 200 hanging despite bank rise

ASX 200 Financials broke through resistance at 5900/6000 while bullish divergence on Twiggs Money Flow signals buying pressure. The primary trend remains down but it appears that a base is forming. I remain wary of banks because of declining house prices but you can’t argue with the tape. A higher trough on the next correction would confirm a reversal.

ASX 200 Financials

The ASX 200 shows another hanging man candlestick at 6200 on the weekly chart, signaling hesitancy. The primary trend is down and the index is due for a correction soon. A higher trough would reverse the down-trend but there is a lot of uncertainty in global markets.

ASX 200

The Materials sector is retracing to test its new support level at 12500 after meeting resistance at 13000. The primary trend is upward and breach of 12500 is unlikely.

ASX 200 Materials

I remain cautious on Australian stocks and hold more than 40% in cash and fixed interest in the Australian Growth portfolio.

Colin Twiggs

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.

February 25, 2019

ASX 200 buoyant but banks a worry

The Materials sector (18.5% of the ASX 200 index) continues its advance, buoyed by a temporary iron ore shortage and positive spin on US-China trade talks. The higher trough on Twiggs Money Flow below confirms buying pressure.

ASX 200 Materials

ASX 200 Financials (31.4% of the main index) are testing resistance at 5900/6000 but remain in a primary down-trend. Declining house prices are a significant headwind. Respect of resistance would strengthen the bear signal, while breakout would warn that a base is forming.

ASX 200 Financials

The ASX 200 is likely to test the 2018 high at 6350 but remains in a bear market. Another test of the former primary support level, at 5650, is likely. A higher trough, at that level, would reverse the down-trend.

ASX 200

I am cautious on Australian banks and hold more than 40% in cash and fixed interest investments in the Australian Growth portfolio.

Colin Twiggs

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.

February 15, 2019

ASX 200 enjoys iron ore spike

The ASX 200 has been buoyed by a temporary spike in iron ore prices. Materials (comprising 18.5% of the main index) broke through resistance at 12500, signaling a primary advance. A higher trough on Twiggs Money Flow indicates buying pressure.

ASX 200 Materials

The ASX 200 encountered resistance at 6100 but the rally could go so far as to test the 2018 high of 6350. We remain in a bear market. Only a correction that successfully forms a higher trough would reverse that. Expect another test of the former primary support level at 5650.

ASX 200

Financials, the largest ASX 200 sector (31.4%), remains in a primary down-trend. Declining house prices are likely to drag the index lower. Respect of resistance at 5900 would strengthen the bear signal, while breach of 5300 would signal another decline.

ASX 200 Financials

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.

Colin Twiggs

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.

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.

Colin Twiggs

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.

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.

Colin Twiggs

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.

January 26, 2019

ASX 200: Hanging man

A hanging man candlestick on the weekly chart warns of increasing selling pressure as the ASX 200 approaches resistance at 6000.

Hanging man

Respect of 6000 is likely and reversal below 5650 would confirm the primary down-trend. Resolution of the US-China trade dispute or announcement of another massive Chinese stimulus could avert the bear market, but don’t hold your breath. Breach of support would offer a target of the 2016 low at 4700.

ASX 200

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

Colin Twiggs

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.

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.

Colin Twiggs

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.

January 12, 2019

ASX 200 bear rally

Credit growth in Australia is falling (with help from the Royal Commission) and broad money growth is anemic, below the lows of the GFC, warning that the economy is close to a contraction.

RBA: Credit & Broad Money

Banks are particularly vulnerable because of the falling housing market. The bubble threatens to burst after a long expansion and the RBA is low on ammunition. How many rate cuts do you think they have left in reserve?

The ASX 200 Financials Index is testing long-term support at 5400. Declining Momentum peaks warn of a bear market. Breach of support is likely to lead to another decline, with a long-term target of 4000.

ASX 200 Financials Index

The Resources sector is in far better shape but the ASX 200 Materials Index is also slowing, with a strong bearish divergence on 13-week Momentum. Reversal below primary support at 11000 would confirm a primary down-trend.

ASX 200 Materials

The ASX 200 is testing resistance at the former band of primary support between 5650 and 5800 (revised up from 5750). The rally could go further, possibly as high as 6150, but this is a bear market and the probability that this rally will change that is low. Respect of resistance is likely and reversal below 5650 would confirm the bear market for Australian stocks. Initial target for a primary decline is 5000.

ASX 200

Our hope is that China rescues us with another massive stimulus spend, as in the GFC, lifting the resources sector. But hope isn’t a strategy.

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

Colin Twiggs

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.