ASX200 index – has the potential to generate a technical buy signal.

The ASX200 index - a further rally is required to break through key resistance to generate the technical buy signal. However, the substantial increase in the number of large cap stock buy signals that commenced in early July was the first indicator of a broad market momentum / trend change. As highlighted in previous wires this will precede any (positive) technical trend change at an index level. Out of the top 20 ASX stocks - 10 stocks have recently generated buy signals, and overall a total of 31 stock technical buy signals have been generated during July. The speed with which the large cap stock buy signals have been generated is a measure of fund flow and rotation, especially into the financial stocks. A major upward shift in the financials sector technical rating occurred in July due to heavy concentration of buy signals generated in this sector, including three of the four major banks. There are now early, tentative signs that the resource sector of market may have the potential to form a base. Something to watch at this stage.