Update from Colin Twiggs.

ASX risk-on

By ColinTwiggs
November 21, 2020

First, please read the Disclaimer.

The ASX 200 followedthrough above 6400, signaling another test of the February high at 7100. Expectretracement to test the new support level at 6200. Rising Trend Index troughsindicate buying pressure.

The train has left the station ahead of time, with theASX 300 Banks index follow-through above 6300 confirming a target of 7200 forthe current advance (5200 trough extended above the 6200 peak). Rising TrendIndex troughs again signal buying pressure. We expect a tough time in 2021 whengovernment stimulus expires but will cautiously increase our weighting to the big four banks.

The ASX 300 Metals & Mining index, on the other hand,continues to warn of selling pressure, with tall shadows on weekly candles andTrend Index peaks below zero. Breach of support at 4400 would signal anotherdecline with a short-term target of 4000 (peak at 4800 extended below supportat 4400).

Conclusion

The ASX is experiencing a relief rally that, apart fromMetals & Mining, is expected to carry through into the New Year. We remaincautious of banks, and bearish on iron ore, but bullish on Gold.

Quote for the Week

When the level of optimism is high, there is usually moreroom for disappointment.

~ Howard Marks

Updates for Market Analysis Subscribers

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· Stocks still defying gravity

Disclaimer

Colin Twiggs is director of The Patient Investor Pty Ltd, an Authorised Representative(no. 1256439) of MoneySherpa Pty Limited which holds Australian FinancialServices Licence No. 451289.

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