The ASX 200 reflects a tussle between the resources and banking sectors which are pulling in opposite directions. The ASX 300 Metals & Mining Index is falling, with declining Twiggs Money Flow warning of long-term selling pressure.
The banking sector, however, is rallying. The ASX 300 Banks index recovered above 9000, signaling another advance, while rising Twiggs Money Flow indicates long-term buying pressure.
The banking sector is larger, but more vulnerable to shocks from other parts of the economy, so this is an even match.
The ASX 200 is again testing resistance at 5800. The ascending triangle (5600 to 5800) and rising Twiggs Money Flow are both bullish signs. Breakout above 5800 would signal a test of 6000*.
* Target medium-term: 5800 + ( 5800 – 5600 ) = 6000
Banking performance tends to lag other sectors, however. It takes time for consequences of a slow-down in other parts of the economy to impact on banks, through slower growth and higher bad debt provisions. I expect stubborn (ASX 200) resistance at 6000.