Money hides in banks and the US, while the satellite stays in cash

Your questions, answered

Market wrap

The Australian market is holding up, but mostly because money has flowed into the banks as a defensive bid: OZF is up about 9% while resources have been under pressure. It looks like an initial bottom is in, but the index is still under its 200-day average and needs time to repair, probably into late November. Overseas, money is leaving Europe for the US: the S&P 500 is holding up, the equal-weight S&P 500 and US small caps are improving and US regional banks are back above their 200-day averages. China looks very weak. Only four of the 30 biggest markets are in bear markets (China, Korea, Indonesia and Saudi Arabia), with Brazil, South Africa and Hong Kong close.

Good entry points for SOL and AQLT? I already own a good chunk of BGBL.

SOL (Soul Patts) is in a base on the daily chart; a move through about $48 could be a breakout, but it’s choppy and I’d prefer it tighter. AQLT (Betashares Australian Quality) has run straight from its 200-day to its previous highs because money has been hiding in financials, so it needs to rest. A potential breakout is around $36.65, but with Westpac reporting on Monday it could be volatile. The bigger risk is that money rotates out of these defensive names into beaten-down areas like resources.

Thoughts on PMGOLD?

PMGOLD tracks the gold price via the Perth Mint. Gold is under its 200-day average and platinum, palladium and silver are weak. After a roughly 157% move, a pullback of under 30% is normal. Either it holds this low and needs time, or it has a sharp shakeout below the low, which could be the buy point. Likely causes are profit-taking and some governments liquidating gold. It’s on the watch list, but I wouldn’t rush in.

A200 vs AQLT?

AQLT has done better recently because it holds more financials, where defensive money has been hiding: only about 10% materials versus about 30% in the index. The Australian market is a battle between financials and resources. If Westpac’s result triggers a rotation from banks back to resources, AQLT could underperform and A200 could pick up, though you might then prefer to buy resources directly. A200 may chop for a while until other sectors start contributing.

EWZ, PBR and BBD (Brazil)?

After the election result, with the winner on about 50% of the vote and some concerns about irregularities, Brazil looks uninvestable for now. EWZ (Brazil), PBR (Petrobras) and BBD (Bradesco) are all in big, volatile bases. If you want to bottom-pick, China and India are much further through their corrections, but we still want to see bases form first.

Thoughts on ASIA as a satellite? It’s down 20% from its peak.

ASIA is mostly a play on South Korea and Taiwan semiconductors (SK Hynix, Samsung, TSMC), while Tencent and Alibaba look weak. It has held around its 200-day average after a roughly 100% run, which is normal, but it probably needs a couple of months to form a base. A good satellite idea, but don’t buy just because it’s down; wait for a base and a buy point.

Thoughts on MVR and SEMI?

MVR (Australian resources) is in a big base and looks to have held its low twice. The next couple of weeks matter: we want it back above its 200-day and creeping higher. SEMI is sitting on its 200-day, which is a good sign, but after such a strong move it may need time, possibly into the first quarter of next year, much as MVR took about a year to set up again. Good themes, but they need time.

I started VGS in September for the long term. Can I expect 10% a year?

VGS is about 60–70% US, so it depends on the US market. It has held up but is stuck in a base below resistance. We’re at the point in the US midterm cycle where markets have often bottomed, so it’s reasonable to keep accumulating as long as it doesn’t go lower. Diversified cores like DHHF and VDAL have held above their 200-day averages, and we’re happy to stay fully invested in the core heading into a potential Christmas rally.

What’s the trigger for reinvesting the satellite cash?

We’re 100% cash in the satellites. The triggers are: our Market Health-O-Meter turning from risk off to risk on (it tracks 17 market ETFs against their 10, 20, 50 and 200-day averages, and has been risk off for 14 weeks); our US ETF risk gauges turning risk on; and our key ideas count rising. Right now we have almost no ideas, which tells you the market isn’t ready. We’ll be led by the setups.

VGS and VAS 70/30 as a young investor?

A 70/30 global/Australian mix makes sense, but you can do it more simply with one diversified ETF such as VDAL or DHHF. VDAL is about 40% Australian and 60% international, including hedged global shares, global small companies and emerging markets, so you get more diversification and some currency hedging in one ETF. Then add satellites (Asia, MVR, gold, semiconductors) to learn to spot bases and trends. GHHF is a geared option for those comfortable with more risk.

Thoughts on 60% DHHF and 40% NDQ?

DHHF is about 37% Australian and 63% international, with roughly 40% US. Adding 40% NDQ is essentially rebuilding a core with a much bigger tilt to US tech. I do think the US is where money wants to be, but I’d lean towards a true core and satellite approach instead: keep DHHF as the core and use satellites for what it barely holds, like gold, energy, miners, robotics or Bitcoin.

ETFs for growth, like ACDC or RESM?

ETFs are a great way to target growth because you own a whole basket, so one stock falling 20% doesn’t sink you. But ACDC and RESM (rare earths) are firmly in downtrends: ACDC has been dragged down by lithium (the lithium miners ETF is about 50% off), and RESM is in a solid downtrend after a short bounce. Just because something has sold off isn’t a reason to buy. Wait for a bottom and a base, possibly mid-2027. See the base and trend method.

How do you allocate capital across a portfolio of ETFs?

Start with your core and satellite split: for a $100,000 growth portfolio, maybe $70,000 in one diversified core ETF and $30,000 across 6–10 satellites. Start each satellite at about 10% of the sleeve and pyramid up towards 20% when the market is working. The key is a tight entry and a stop-loss. Our satellite record since mid-2025: 32 trades, a 33% strike rate, average wins of about 8.9% and average losses of about 3.3%, so the winners pay for the losers. More in core and satellite investing.

Is the AI boom heading for a correction?

Valuations are well out of whack, and in the dot-com bust prices fell before the bad news: the market rallied another 20% after Lucent’s first warning, then collapsed as earnings misses piled up. Price leads fundamentals. Today’s AI leaders may not be the winners in 10 years, and the only profitable pure play so far is the “picks and shovels” semiconductors. Be careful, and remember there will be other opportunities.

What do you make of the ASX 200 closing above its 50-day average?

It’s mostly the banks, which have popped about 8% as money hides there, along with healthcare like CSL. That could come home to roost when Westpac reports. The market without financials and resources (OZXX) is holding up but struggling, and Australian tech is doing nothing. I expect chop until other sectors fire, and think the better opportunities are offshore, particularly the US.

Is a correction coming for the S&P 500?

Midterm years have historically seen weakness around now, bottoming around 27 October before the elections on 3 November, followed by a year-end rally. The S&P 500 and Nasdaq have held up remarkably well while small caps and the equal-weight index struggled. Nothing yet suggests a correction; it’s range-bound. If it breaks key support, be cautious; if it holds and breaks out, get involved.

HJPN has been choppy. When should I get out?

Japan has been choppy with the tech selloff and rotation out of Asia, but sitting in a base after a big rally is normal, and it has found support. If that support breaks, something has changed and it’s time to get out. Otherwise it’s really about opportunity cost: is there something better setting up?

Any newer ASX ETFs you like as satellites?

Newer isn’t necessarily better. With new ETFs I compare overseas equivalents for more history. I like silver miners (SLVM) on the watch list, and I’ve been watching Savana US small caps (SVNP) and some active funds from Macquarie and Perennial. We played DRGN early in the China run and were stopped out. We’ll play whatever sets up from a proper base.

VHY or A200?

VHY is about 40% financials, and I’m cautious on the banks given the economy and the property correction. A200 has slightly less financials and a bit more materials, so I’d choose A200. But I think the better opportunities are overseas, particularly in the US. See VAS vs A200 and franking credits and ETFs.

Thoughts on Bitcoin and Ethereum?

Bitcoin has held up well and looks like it’s bottoming, but it’s hit resistance where trapped buyers want out after a V-shaped move. It probably needs a more symmetrical base, possibly early 2027, perhaps alongside other hard assets like gold and silver. Ethereum is weaker and more volatile; of the two, Bitcoin looks better.

I’m adding DHHF as my core. Keep adding monthly into 2027, or wait?

It depends on how much you’re adding relative to what you hold. As a guide, annual contributions of around 20% of your balance make dollar-cost averaging worthwhile in a correction; if you hold a large balance and add a little, watch the nest egg instead. As long as DHHF holds above its 200-day average, I’d keep dollar-cost averaging into a potential year-end rally. Lite members get this analysis every week.

ROYL: why isn’t it talked about more?

ROYL holds global royalty companies: mining, music, pharmaceuticals and more, with about 28% in gold. It’s cash-flow focused, which is attractive, but it has been very volatile and is in a big base, possibly into 2027. Because it mixes so many sectors, when one part runs another doesn’t. Sometimes it’s better to play the sector that’s working directly.

Does the core have a stop-loss like the satellites?

Not a stop-loss as such. We watch the Australian market and the S&P 500 and Nasdaq, which drive most of a diversified core. If the core breaks key support, we trim in steps, perhaps 20%, then more if it fails to bounce, rather than riding a bear market. With satellites already in cash, a 70/30 portfolio could move to 50% cash or more, a big advantage over super funds that are always fully invested.

With all the wars, why haven’t defence ETFs performed?

DTEC and the defence ETFs had huge runs and simply needed a rest. It’s a classic case for taking profits and stepping aside once key support breaks, as we did with XMET. Lithium is similar: high oil prices should help it, yet lithium miners are down 50%. The market doesn’t always make sense, which is why we follow the chart.

Would you buy DHHF at these prices?

We’re 90–100% invested in our core. DHHF is in a base, so there’s no need to rush in with a lump sum; the clear buy is when it breaks out into an uptrend. If you’re dollar-cost averaging, it can make sense to keep buying through the base, and through any dip if it breaks down.

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General advice only, given live at the date shown. Questions are answered generally, without knowing your personal circumstances. ETFs and shares mentioned are not recommendations. Market views change quickly, and past performance is not a reliable indicator of future performance.