ASX 200 Forecast: Miners Cushion The Index, But 8,800 Still Blocks The Recovery

Tech Pops, Banks Drag

Xero and Pro Medius are both up by over 7%, so tech and healthcare are doing the work for the second trading session in a row. The catalyst behind Pro Medicus seems to be recent US contract wins that are keeping the demand in the stock. But the banks are in the red. ANZ is down 3%, WBC is down 1.55% and NAB is off by 0.94%. Miners are also helping with BHP up 1.42%, Rio up 1.52% and Newmont up 1.2%. The Index was more or less flat on the day.

Xero and Pro Medicus Rally While Banks And Healthcare Drag

Building Approvals Miss

Building permits were down 3.4% month over month which was worse than the -1.5% forecast. Twice as bad. This sort of news brings growth fears a little higher but rate pressure a little lower.

Building Approvals Fall More Than Expected

Corporate Profits Roll Over

Company gross profits fell 1.3% QoQ, below the 0.5% forecast. The reading prior was a strong +5.9% so it seems that corporates are losing some earnings momentum. We need to follow this closely as there could be medium term implications for the ASX 200 Index if profits continue to weaken further. We really don’t need a margin squeeze right now.

Company Profits Turn Lower After A Strong Prior Quarter

Yields Bounce Around

We see the Australia 10-year yield bouncing between 4.8% and 4.95%. The short to medium term trend is down with the Supertrend flipped negative and the Renko bricks are below the 21-EMA and 50-SMA. Yet taking a step back, yields are above the long term 500-SMA. We see momentum picking up. Somewhat. The Z-Score SMA is trending higher and the RSI is making some higher highs and higher lows. So we may get a little bounce higher in yields. My expectations are for a test of the 50-SMA.

Australian 10-Year Yield Bounce Around On Renko Chart

ASX 200 Renko Tests 8,800

Yay! We’re back above the 500-SMA. Bricks are also above the 21-EMA and 50-SMA. The Supertrend just flipped green as well with momentum picking up. Indeed, the RSI is nearing 60 and trending higher while the Z-Score SMA is trending higher as well with some more room to run. This might be it. This might be the momentum we need to get that weekly close above 8,800.

ASX 200 20-Brick Renko Moves Back Above Long Term 500-SMA

Current Trend Direction: Bearish

Bias: Negative

Support Levels: 8,255

Resistance Levels: 8,800, 9,230

Medium Term Path: This short term rebound attempt, as observed by the Renko chart, looks promising. I wouldn’t change my medium term view until we get a firm weekly close above the 8,800 price level.