Crunch time for the ASX

The ASX 300 Banks index breached primary support at 8000, signaling renewal of the primary down-trend. Bearish divergence on the Trend Index has been warning of strong selling pressure for some months, reinforced by the Trend Index holding below zero for almost a year. A primary decline is expected to target the 2016 low at 7100.

ASX 300 Banks

Decline of its largest sector is likely to weigh heavily on the ASX 200 index. Bearish divergence on Twiggs Trend Index warns of selling pressure. Breach of primary support at 5800 is likely and would present a short-term target at 5650. Follow-through below 5650 would confirm a primary decline and a target of the June and November 2016 lows at 5050.

ASX 200

3 thoughts on “Crunch time for the ASX

  1. Rupert McLaren says:

    Thanks Colin for a very enlightening analysis of the current situation .

    My current tendency is to sell out the whole box and dice and wait on the sidelines until the smoke clears ; l did such prior to the 87 crash and the tech wreck .

    Best wishes , Rupert .

    • ColinTwiggs says:

      I wouldn’t argue against your suggestion. It depends on your risk profile as to whether you should sell out now or merely scale back exposure.

      • ColinTwiggs says:

        Investors face two risks:

        1. Staying in the market for too long; and
        2. Staying out of the market for too long.

        I recall a friend selling his entire US investment portfolio in 1997 because stocks were overvalued and risked a major collapse. He was right. Just three years — and 50% — too soon.

        S&P 500 1994 - 2003

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s