ASX: Banks and Miners v the Rest

The struggle between miners and banks is changing.

The ASX 200 rallied this week, breaking out of its downward trend channel. Although in a primary down-trend after breaching 5800, the index is enjoying strong support.

ASX 200

And that is despite the Banks taking a hammering.

ASX 300 Banks

Miners did nothing this week.

ASX 300 Banks

But most other sectors rallied strongly: Consumer Staples…

ASX 200 Staples

Consumer Discretionary, Health Care…

ASX 200 Health Care

Utilities and Industrials.

ASX 200 Industrials

The change reflects a rosier global outlook, with Commodities rising, but I doubt that it can last without support from the ASX 200’s two biggest sectors.

ASX: Miners versus Banks

The struggle between miners and banks continues.

The ASX 300 Metals & Mining index is rallying strongly. Breakout above 3600 and the descending trendline suggests that the correction is over and a new advance is underway.

ASX 300 Banks

But the financial sector is being hammered by bad press from the Royal Commission and the ASX 300 Banks index is likely to test the 2016 low at 7100. Trend Index peaks below zero warn of strong selling pressure.

ASX 300 Banks

The ASX 200 index recovered above primary support level at 5800 but bearish divergence on Twiggs Money Flow continues to warn of long-term selling pressure. Retreat below 5800 is likely and would confirm the primary down-trend. Breach of mid-2017 lows at 5650 would strengthen the bear signal, offering a target of 5050 (the June and November 2016 lows).

ASX 200

ASX 200: Miners versus Banks

Direction of the ASX 200 is generally dictated by the two largest sectors: banks and miners.

The ASX 300 Metals & Mining index rallied off its long-term rising trendline this week. Breakout above 3600 would signal that the correction is over and a new advance is to be expected.

ASX 300 Banks

But the big four banks dominate index weightings and the ASX 300 Banks index respected resistance at 8000, confirming a primary decline. Trend Index peaks below zero warn of strong selling pressure. Target for the decline is the 2016 low at 7100.

ASX 300 Banks

The ASX 200 index recovered above primary support level at 5800 but its hold looks precarious. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure (the Trend Index is even more bearish). Retreat below 5800 is likely and would confirm the primary down-trend. Breach of mid-2017 lows at 5650 would strengthen the bear signal, offering a target of 5050 (the June and November 2016 lows).

ASX 200

Banks lead ASX 200 lower

The ASX 300 Banks index is retracing to test the primary support level at 8000 breached 3 weeks ago. Trend Index peaks below zero warn of selling pressure. Respect of resistance at 8000 is likely and would warn of a primary decline to the 2016 low at 7100.

ASX 300 Banks

The Royal Commission on banking is having a two-fold effect on the market. First, airing of banks’ dirty laundry in public has increased investor concerns, leading to a sell-off in banking stocks. But the second effect may be more significant. Banks are expected to tighten lending standards as a result of the commission, which will slow credit growth. Slower credit growth would result in falling house prices as new buyers struggle to obtain finance, except at lower LVRs and higher interest rates. Falling house prices in turn would encourage banks to further tighten lending standards. Slower lending growth and higher default rates would both impact on bank earnings….. and stock prices.

Adding to ASX misery, the Resources sector is undergoing a correction, now in its third month, with the ASX 300 Metals & Mining index heading for a test of support at 3250.

ASX 300 Banks

The ASX 200 index is retracing to test its former primary support level at 5800. Bearish divergence on Twiggs Money Flow warns of selling pressure. Respect of resistance is likely and would confirm a primary down-trend. Breach of the mid-2017 lows at 5650 would strengthen the bear signal, offering a target of the June and November 2016 lows at 5050.

ASX 200

ASX slipping over the edge

The ASX 300 Banks index followed through after breaching primary support (at 8000) last week. Bearish divergence on the Trend Index confirms strong selling pressure. Expect a primary decline to target the 2016 low at 7100.

ASX 300 Banks

The ASX 200 index slipped below primary support at 5800 this morning, warning of a primary down-trend. A close below 5800 this afternoon would strengthen the signal. Bearish divergence on Twiggs Trend Index signals selling pressure. Expect a test of the June to September low at 5650. Breach of 5650 would confirm a primary decline and target the June and November 2016 lows at 5050.

ASX 200

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

ASX 200 meets stubborn resistance

A long-term, monthly chart filters out most short-term market ‘noise’. The ASX 200 has found stubborn resistance at 6000, while bearish divergence on the Trend Index warns of selling pressure. Follow-through below 5900 would warn of a test of primary support at 5600/5650. A primary down-turn on ASX banks would strengthen the bear signal.

ASX 200

The ASX 300 Metals & Mining index continues in a primary up-trend. Respect of the rising trendline remains likely and would suggest another primary advance.

ASX 300 Metals & Mining

The ASX 300 Banks index rallied strongly in 2016/2017 but bearish divergence on the Trend Index now warns of strong selling pressure. Breach of primary support at 8000 would signal renewal of the primary down-trend, with a target of 7000. A down-trend in its largest sector would weigh on the entire ASX 200 index.

ASX 300 Banks

ASX 200: Bank relief but miners bearish

The ASX 300 Metals & Mining index broke support at 3500, warning of a test of primary support at 3300. The long-term up-trend is losing momentum.

ASX 300 Metals & Mining

Banks continue in a long-term down-trend but recovery above the former primary support level at 8100 offers temporary relief. Respect of the declining trendline warns of another test of primary support at 8000. Breach would signal a primary decline.

ASX 300 Banks

The ASX 200 remains hesitant. Bearish divergence on the Trend Index continues to warn of long-term selling pressure. A primary down-turn on either banks or miners would strengthen the bear signal. Breach of support at 5800 would signal a primary down-trend.

ASX 200

ASX 200: Miners & banks spoil the party

Miners are undergoing a correction. Breach of the rising trendline and support at 3500 on the ASX 300 Metals & Mining index would warn that the up-trend is losing momentum.

ASX 300 Metals & Mining

Banks continue their bearish down-trend, respect of the declining trendline warns of another test of primary support at 8000. Breach would signal a primary decline.

ASX 300 Banks

The ASX 200 will follow if banks and miners, the two biggest sectors, fall. Bearish divergence on the Trend Index continues to warn of long-term selling pressure. Breach of support at 5800 would signal a primary down-trend.

ASX 200

ASX 200 back from the brink

A positive week for the ASX 200 index as Australian banks came back from the brink, recovering above primary support at 8100. Expect a rally to test the declining LT trendline around 8350 but selling pressure continues, with the Trend index below zero, and another test of primary support, this time at 8000, is likely.

ASX 300 Banks

Miners continue their up-trend. Although this week’s bearish hanging man candle warns of a correction.

ASX 300 Metals & Mining

The ASX 200 will lift for as long as the bank rally lasts but ASX 300 Banks long-term trend is downward. Bearish divergence on the Trend Index continues to warn of long-term selling pressure.

ASX 200

ASX 200: Banks break support

The ASX 300 Banks index broke primary support at 8100, signaling a fresh decline. Follow-through below 8000 would strengthen the signal. Another Trend Index trough at zero warns of long-term selling pressure. The next major support level is the 2016 low at 7200 but expect retracement to first test new resistance at 8100.

ASX 300 Banks

Miners rallied, softening the blow.

ASX 300 Metals & Mining

But decline in its biggest sector would weigh heavily on the ASX 200. Retracement is likely to test 6000 but respect would warn of a test of primary support at 5650. Bearish divergence on Twiggs Trend Index warns of long-term selling pressure.

ASX 200

ASX 200 selling pressure, banks weaken

The ASX 300 Banks index fell sharply, testing primary support at 8100. Continuing Trend Index troughs below zero warn of long-term selling pressure. Breach of primary support would signal a decline to the 2016 low at 7200.

ASX 300 Banks

Miners also retreated, testing medium-term support at 3500, though primary support at 3300 is expected to hold.

ASX 300 Metals & Mining

The ASX 200 tested medium-term support at 5800. Bearish divergence on Twiggs Money Flow warns of long-term selling pressure. Test of primary support at 5650 is likely.

ASX 200

ASX rally faces strong resistance

The ASX 200 found strong support at 6000, rallying strongly to test resistance at the recent high of 6150.

ASX 200

The recovery was assisted by banks, with the ASX 300 Banks index rallying to test resistance at 8500. Shallow Trend Index troughs below zero reflect improved buyer sentiment (still bearish but only just).

ASX 300 Banks

Miners are correcting as iron ore continues to lose ground.

ASX 300 Metals & Mining

Sentiment has been buoyed in recent weeks by global bullishness towards equities. But Friday’s US reaction to rising wage rates warns that the market is growing increasingly anxious about high stock valuations. Expect strong resistance for the ASX 300 Banks Index at 8500 and the ASX 200 at 6150.

ASX 200 selling pressure

The ASX 200 found support at 6000 but the bears are not over yet. Thursday’s Hanging Man candle is bearish despite the long tail. Expect another test of support in the week ahead.

ASX 200

The monthly chart gives a long-term perspective. Respect of 6000 would confirm a primary advance. But bearish divergence on Twiggs Money Flow continues to warn of selling pressure.

ASX 200

ASX retreats

The ASX 300 Metals & Mining index is undergoing a correction which is likely to test medium-term support at 3500.

ASX 300 Metals & Mining

Banks continue to weaken, with the ASX 300 Banks index testing medium-term support at 8300. Breach is likely and would signal a test of primary support at 8100. Trend Index peaks below zero continue to warn of selling pressure.

ASX 300 Banks

With both miners and banks in retreat, the ASX 200 is correcting for a second test of medium-term support at 5900. Respect would confirm the primary up-trend. But bearish divergence on the Trend Index warns of selling pressure and a test of 5800 is likely.

ASX 200

Target for the ASX 200 is the 2007 high of 6800 but a lot will depend on the relative strength of banks and miners.

ASX 200 retreats

The ASX 200 retraced to test its new support level at 6050. Falling 21-day Twiggs Money Flow indicates medium-term selling pressure. Breach of 6050 would warn of a test of 5900.

ASX 200

The current advance is fueled by rising commodity prices, with the ASX 300 Metals & Mining index advancing strongly.

ASX 300 Metals & Mining

But the ASX 300 Banks index is pulling in the opposite direction, respecting resistance at 6500 while the Trend Index continues to warn of moderate selling pressure. Breach of 8300 is likely and would warn of a test of primary support at 8000/8100.

ASX 300 Banks

Target for the ASX 200 is the 2007 high of 6800 but a lot will depend on the relative strength of banks v. miners.

ASX breaks resistance

The ASX 200 broke through 6050 after respecting support at 5900 over the last few weeks. Expect retracement to test the new support level. Bearish divergence on Twiggs Money Flow remains a concern, warning of large numbers of sellers. Target for the primary advance is the 2007 high of 6800 but I remain wary because of selling pressure and banking sector weakness.

ASX 200

The ASX 300 Banks index found short-term support at 8300. Twiggs Trend Index continue to warn of moderate selling pressure. Breach of 8300 is likely and would warn of a test of primary support at 8000/8100.

ASX 300 Banks

ASX struggles with resistance

Bulls were baited with a third ASX 200 breakout above resistance at 6000, only to see the index retreat yet again. Declining Money Flow warns of commitment from sellers. Breach of support at 5920 would confirm a correction already signaled by Money Flow (21-day) crossing to below zero.

ASX 200

The ASX 300 Retailing Index is weak, anticipating a poor Christmas.

ASX 300 Retailing

But Food & Staples Retailing is strengthening.

ASX 300 Food & Staples Retailing

ASX 200 direction, however, is largely determined by Banks and Miners.

The bear-trend on iron ore is weak, with the bulk commodity continuing its test of resistance at 70. Respect would warn of another decline, while breakout above 80 would signal a primary up-trend.

Iron Ore

The ASX 300 Metals & Mining Index, however, shows signs of selling pressure, with Money Flow (21-day) declining to zero. Breach of support at 3300 would warn of a correction.

ASX 300 Metals & Mining

Banks continue to disappoint, with the ASX 300 Banks index headed for a test of short-term support at 8250. Twiggs Trend Index peaks below zero indicate continued selling pressure. Breach of 8250 is likely and would warn of a test of primary support between 8000 and 8100.

ASX 300 Banks