Finspiration Australia. Chart Analysis for Australian and International Stock Market

    Weekly Wrap - Week ending 29 July, 2022.

XJO Monthly Chart.

It was a strong month for the XJO, up +5.74%, but technically the monthly chart remains bearish.

Both Supertrend Lines remain blue (bearish).  8-Month EMA is headed down.  Hull MA13 is headed down.

  All indicators are on the bearish side.

The XJO is finding support at the 50-Month EMA where it also found support back at the end of 2018.

Weekly Chart.

XJO had a strong week, up +2.26%.  The chart is bullish.

The index has found support at the 200-Week MA and finished above its 8-Week EMA which is pointing up.  HullMA13 has turned positive.  

Dynamic RSI(14) and Dynamic Zone Stochastic have given a "buy" signals. 

Both Supertrend lines have switched from blue to yellow - bullish.

All of that is bullish.

Monthly and Weekly Charts are out of sync (Monthly - bearish, Weekly bullish) so we are seeing a trend change in the medium term.

Daily Chart.

           

XJO has broken above resistance of the 50-Day MA and now is faced with horizontal resistance at 6982.  XJO finished Friday at 6945.

Hull MA13, two Supertrend lines and 8-Day EMA are all heading to the upside - bullish.

Dynamic Zone RSI14 and Stochastic Momentum Indicator are both now overbought.

The short-term trend is bullish.

For this short-term trend to continue, XJO must rise above horizontal resistance.

The Weekly and Daily charts are both bullish but out of sync with the Monthly Chart.  The most likely scenario is more upside.

SP500 Daily.

SP500 is bullish in both the Short-term and Medium-Term.  While it remains below the 200-Day MA the Long-term remains in doubt.

Dynamic Zone RSI and Dynamic Zone Stochastic are both overbought and can remain so for some time.  But they are giving out caution signals. has given a "buy" signal and the Stochastic Momentum Indicator is also giving a "buy" signal.

SP500 is headed up to the 50% resistance line of the fall from March to June.  That also corresponds with the top of the congestion zone which occurred in June.

The zone between 50% and 61.8% retracement represents a possible resistance zone.

Given the overbought nature of RSI and Stochastic, I think the coming week will be a tough one for the SP500.  It will probably depend on how big company reports and economic news are received in America.  So far, the reports have generally been positive.

Here's the corresponding zone for the XJO:

Sector Changes - past week.

The Weekly XJO chart was up strongly and breadth was good with eight out of eleven sectors showing positive results.

Of the three best performers, two were resource sectors, Materials (XMJ +4.94%) and Energy (XEJ +3.36%).  Splitting those two was Property (XPJ +3.9%).  

Worst performers were Health (XHJ -0.83%), Telecommunications (XTJ -0.13%) and Consumer Discretionary (XDJ -0.69%).  No doubt XDJ is being affected by the interest-rate crunch imposed by the Australian Reserve Bank.

Sector Strengths by RSI.

RSI (Relative Strength Index) is calculated using the default setting of 14 days - almost three weeks of trading.  It provides a more reliable guide to changes in sectors than the one-week results which can jerk around quite a lot and, thus, RSI is probably a more reliable guide to recent strength in the sectors. (Click here for a description of RSI.)

All eleven sectors have readings above 50 - which is taken as a sign of bullishness.

The sectors with the strongest momentum are, Financials (XXJ) RSI 70.43, and Property (XPJ) RSI at 67.07.  Three other sectors (XSJ, XNJ and XIJ) are all above RSI 60.  So we have a strong, bullish market

As a general rule, its best to follow strong stocks in the strongest sectors. 

In XXJ, the two strongest large cap stocks are NAB (RSI 71.01) and BOQ (RSI 69.57).  

In (XPJ), the two strongest large cap stocks are GMG (RSI 68.75) and LLC (RSI 68.23).  

Do your own research on those stocks.

Breadth:

    1. New Highs - New Lows Cumulative.

This is one of the important breadth indicators.  Unless breadth is solidly positive, the market is always under threat.

NH-NL Cumulative is on the brink of crossing above its 10-Day Moving Average.  New Lows have dropped consistently in recent weeks, Friday saw the balance between NH and NL tip to the NH 15/5.  Another strong week on the XJO could produce a switch in the NH-NL Cumulative to bullish.  Continue to watch.

This metric trends very strongly.  As such it is a valuable guide to the long-term investor, but not much use to the short-term trader.  It gave a timely signal to go long in May 2020, and a sell signal in January 2022.  That's a good run for the long-term investor.

If NH-NL Cumulative gives a new buy signal, I'll put that up on my blog during the week rather than wait for the week-end.

    2.  ASX Advance-Decline Line.

This is another important indicator of breadth.

The ASX Advance-Decline Line turned bullish at the beginning of July, predicting the good month we've seen for stocks in July.  At this stage it remains bullish.  Watch for a turn-down to predict a bearish reversal.

    3. Strong-Weak Stocks Cumulative.

This chart has turned bullish being above its 5-Week MA.   

% of Stocks above key moving averages.

1.  % of stocks above 10-Day Moving Average: Last Week 73%, This Week 78%.

2.  % of stocks above 50-Day Moving Average, Last Week 52%, This Week 70%.

3.  % of stocks above 200-Day Moving Average, Last Week 25%, This Week 31%

These figures suggest that the market is bullish in the short and medium term, but the long-term trend is still in doubt.  That confirms the long/medium/short term experience on the Monthly/Weekly/Daily XJO charts.

I'd like to see all of these above 50% to feel comfortable about the longer term bull market. 

Conclusion.

1.  Monthly, Weekly and Daily Charts are not in sync, one bearish, two bullish.   Stay with the short/medium term trends until other-wise indicated.

2.  SP500 Daily has been bullish in the short/medium term, but is approaching a key reversal zone.  XJO is in a similar situation.Watch.

3.  Breadth according to Advances-Declines is improving but we still have to wait on NH-NL Cum to break to the upside.

4.  XXJ and XPJ have strongest momentum.  Look to strong stocks in those sectors.  Do your own research on stocks in those Sectors.

5.  I'm expecting a consolidation or retracement to occur in the latter part of the coming week.

In America, reporting season continues.  Results, which so far have been generally favourable, will continue to sway the market.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

30/7/22.  Yesterday in Australia.

 

XJO up yesterday +0.81%.  The chart remains within the Kumo Cloud - the no-trading zone.

Negative divergence on CCI hints at a possible pull-back in the near future.

Dynamic Zone Stochastic remains overbought.  A break below the top channel line would be a short-term sell signal.

Overnight in the U.S.

Dow Jones +0.97%.  SP500 +1.42%.  Nasdaq +1.88%.  Small Caps +0.84%.  Banks +1.38%.

SP500.

This chart is now bullish in both the medium-term and short-term.  Long-term remains in doubt while the chart remains below its 200-Day M.A.

SP500 closed above the Kumo Cloud - which is a bullish sign.

Looming over-head is a major horizontal resistance line set up by the highs back in early June.

CCI suggests the SP500 might have trouble breaking above that resistance line.  Look for a consolidation and see how that pans out.

July has been good for markets - it is a seasonally strong month.  But, we are now coming into three seasonally weak months:  August, September and October, although October often sees a major break to the upside in the latter part of the month.

Commodities.

Commodities, except for Energy remained strong last night.

Commodities Index +0.45%.  Energy -0.04%.  Base Metals +2.39%.  Agriculture +0.3%.  Gold +0.29%.

Last night in America, BHP +1/89%, RIO +1.92%.

Those results bode well for Australia on Monday.

Finspiration Australia. Chart Analysis of Australian and International Stock Markets.

 29/7/22.  U.S. Equities rise to seven week highs.

Dow Jones +1.03%.  SP500 +1.21%.  Nasdaq +1.08%.  Small Caps +1.27%.  Banks -0.3%.

Apple and Amazon both reported after the market closed.  Both beat expectations and U.S. Futures have risen.

SP500.

All the gaps-down that occurred in the June fall have now been closed.

SP500 chart is now opposite a congestion zone and at the top of the Kumo Cloud.

Expect some consolidation here.

Commodities.

Commodities Index +0.08%.  Energy -0.93%.  Base Metals +2.24%.  Agriculture +0.95%.  Gold +1.22%.

Gold has completed a bullish cup-with-handle formation, that could produce a rally in Ozzie Gold Stocks which have been under pressure in recent times.

Iron Ore +1%.  Thermal Coal flat.

Oz Futures are well up +0.8% which should ensure a strong start to today's trading.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

 28/7/22.  XJO up strongly today following the U.S.

XJO is in a short-term up trend.  The chart is now into the Kumo Cloud - the no-trade zone.

Given today's strong action, tomorrow will probably be a narrow range day.

Anything can happen from here.  

Markets remain captive to earnings season in the U.S.  The market can jerk around as results come out.  So far, they have been largely positive.

Advance-Declines remains bullish.

Advance/Declines was very strong today - so strong that it probably means a pull-back tomorrow.

The ratio Advance/Declines was +0.73 today.  That's the strongest we've seen this year.  That's a plus and a minus, medium term, it's a plus, but short term it probably means a pull-back.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

28/7/22.  U.S. stocks finished higher after Fed. decision.

 Dow Jones 1.37%.  SP500 +2.62%.  Nasdaq +4.08%.  Small Caps +2.33%.  Banks +1.98%.

As expected, the Federal Reserve raised interest rates by +0.75%, but Fed. Head Powell said he didn't think the U.S. was in recession and implied but further rate rises might moderate.

The yield curve, however, remains inverted.  That's usually taken as a sign that a recession is a probability

SP500.

SP500 remains in a short-term up-trend.

CCI and MACD Histogram both show negative divergences from the Index Chart, which suggests SP500 is coming to the end of its rise in the near future.

SP500 is inside the Kumo Cloud, so the top of the cloud might provide resistance.

Commodities.

Commodities also responded well to the interest-rate increase.  Commodities Index +2.28%.  Energy +2.99%.  Base Metals +1.13%.  Agriculture +0.71%.  Gold +1.02%.

Iron Ore +0.1%.  Thermal Coal -0.6%.

Overnight Oz Futures are up 0.8%, so ASX market should have a strong start to trading today

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

27/7/22.  Overnight U.S. stocks fall.

 

Dow Jones -0.71%.  SP500 -1.15%.  Nasdaq -1.87%.  Small Caps -0.55%.  Banks -2.18%.

A slew of reports came out after the market closed including Alphabet, Microsoft, McDonald's, Coca-Cola, Chipotle.  U.S. Stock futures have rise after the bell, about +0.2%.

SP500

SP500 has fallen back to its 50-Day MA which may provide support.  

Federal Reserve gives its interest-rate decision tonight, which might provide market moving information.

Commodities. 

Commodities Index +0.2%.  Energy -0.28%.  Base Metals +1.14%.  Agriculture +1.23%.  Gold -0.12%.

Iron Ore +1.3%.  Thermal Coal +0.9%.

XJO started this morning to the downside, but has since jerked back up.  After 20 minutes, XJO +0.24% with Defensives leading the way.

Finspiration Australia. Chart Analysis of Australian and International Stock Markets.

 26/7/22.  XJO up a little today.

XJO up today +0.26%.  It is edging towards the Kumo Cloud which represents resistance.

Short-term, XJO remains in an uptrend.  Longer-term the trend is down.  Usually, the long-term trend wins out.

The best performing sectors today were the resource sectors, XMJ up +1.6% and XEJ +2.8%.

As Australia is a Resource dependent economy, that's a plus for the market.

But our market still depends on the tides of the international market and the effects of interest rates set overseas.

We have to wait on the release of the Federal Reserve interest rate decision and the market's reaction to that.

At the moment, our market is causing in neutral, waiting to see how things go from here.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

26/7/22.  Mixed results in the U.S.  Tech down, Industrials up.

 Dow Jones +0.28%.  SP500 +0.13%.  Nasdaq -0.43%.  Small Caps +0.67%.  Banks +1.31%.

Walmart reported after the market closed with a pessimistic outlook on the effects of inflation.  U.S. futures fell in response to Walmart's report.

SP500.

The chart is inside the Kumo Cloud, the no-trade zone.  Today's doji candlestick denotes indecision.

The SP500 seems to be waiting on the Federal Reserve's interest rate decision before making its next decisive move.

Commodities.

Commodities Index +1.81%.  Energy +2.07%.  Base Metals -0.22%.  Agriculture +1.35%.  Gold -0.27%.

Iron Ore +0.5%.  Thermal Coal +0.3%.

XJO should up on the plus side this morning.

Finspiration Australia.

25/7/22. ASX choppy and indecisive.

 XJO finished flat today, down just -0.02%.  The days action was choppy and very narrow - which usually leads to expansion.

Clearly, XJO is waiting on news from American earnings season and the Federal Reserve decision on Wednesday.

Tonight, Alphabet reports.

ASX New Highs and New Highs were 10/10 - exactly even.

Advance-Declines favoured Declines,  Advances: 587, Declines 744.

Materials kept the ASX afloat (more or less) up +1.1%. Financials finished flat 0.0%.

Seven out of eleven sectors were down today.  

The ASX is currently captive to the American earnings season and the Federal Reserve.  The Fed is fairly transparent and its decisions built into market movements.  The wild card is the earnings season.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

23/7/22.  Yesterday in Australia.

XJO chart shows a doji candlestick which indicates indecision.  The index finished flat -0.04%.  That comes at a major horizontal resistance level, so the next move may be to the downside.

The market is in a short-term up-trend but a long-term down-trend.  So we can count the current rally as a counter-trend rally.

Stochastic is overbought.  It can remain overbought for lengthy periods of time, but in a bear market the period of time is usually brief.  Watch for a break below 80 for an end to this rally.

Overnight in America.

Dow Jones -0.43%.  SP500 -0.93%.  Nasdaq -1.87%.  Small Caps -0.94%.  Banks -1.52%.

Earnings season produced some big falls yesterday, particularly among social media stocks.  META (Facebook) was down -7%.  Pinterest -13%, SNAP -39% and Alphabet -5%.

Eight out of eleven sectors were down.  The only positive sectors were Consumer Staples +0.66%, Utilities +1.37% and Real Estate +0.76%.  Real Estate got a boost from lower bond yields.  They usually also provide a boost to Technology, but that was weighed down by poor earnings.

SP500.

SP500 is now into the Kumo Cloud - that's a "no trade" zone, so we might see a more turbulent market here.  A break back below the Cloud would be a bearish event.

The Cloud is quite wide here, which means resistance is strong.  The most likely movement, medium term, is back to the downside.  But the market will remain captive to earnings reports.

Commodities.

Mixed results in Commodities.  Commodities Index -1.19%.  Energy -0.81%.  Base Metals -0.6%.  Agriculture -1.53%.  Gold +0.25%.

The lower bond yields in America and good metals prices might help the XJO to some extent on Monday, but I'm not expecting a positive day.

 

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

 22/7/22.  U.S. equities rise for third day.

Dow Jones +0.51%.  SP500 +0.99%.  Nasdaq +1.36%.  Small Caps +0.28%.  Banks +0.63%.

SP500.

The short-term trend remains up.  The chart has moved into the Kumo Cloud, which usually means it will go to the upper side of the Cloud before hitting resistance, that's about 4140, or around 3%.

Commodities.

Commodities Index -1.68%.  Energy stepped down -2.21%.  Base Metals +0.22%.  Gold +1.41%.

Iron ore -0.7%.  Thermal Coal -1.3%.

Those metal and energy prices could put a cap on ASX resource stocks today.

ASX set to open flat.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

 21/7/22.  XJO up moderately today.

XJO up today +0.52%.  That built on yesterday's big gains.

XJO was in a narrow range today until the afternoon session when it had a lift to the upside, giving the day's trading some respectability.

Breadth today was good, Advances 885, Declines 458.

The A-D Line remains bullish.

The NH-NL still hasn't turned bullish.

Long term investors should remain cautious.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

21/7/22.  American equities rise after choppy trading.

 Dow Jones +0.15%.  SP500 +0.59%.  Nasdaq +1.59%.  Small Caps +1.42%.  Banks +0.04%.

Cyclicals were strong while defensives weakened.   

2Yr/10Yr Bond Yields remain inverted suggesting a recession is coming.

SP500.

SP500 is now above its 50-Day MA and in a short-term up-trend.

It is now faced with the resistance of the Kumo Cloud.

Until we see definite signs of reversal, we'll stay with the trend.

Commodities.

Commodities Index -0.08%.  Energy flat 0.00%.  Base Metals +0.88%.  Agriculture flat 0.00%.  Gold -0.94%.

Iron Ore +0.9%.  Thermal Coal +2.2%.

Overnight Oz Futures are down -0.4% suggesting the ASX will open lower.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

 20/6/22.  Oz market up strongly today.

XJO was up today +1.65%.  It broke out above its recent sideways consolidation.  That's a positive.

Volume recently has been very low.  Today saw a rise in volume, albeit off a very low base.  But the rise in volume is another positive.

NewLows/NewHighs were on a par today 7/7.  A break higher for NH-NL could be in the offing.

Advances-Declines continues to be bullish.

Today's action was bullish.  In the very short-term it could be too bullish.  Advances-Declines hit a new high for this year - that's a contrarian sign for a short-term pull-back.

Don't let a short-term pull-back deter you.  The market is performing very well.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets.

 20/7/22.  U.S. Stocks up strongly.

Dow Jones +2.43%.  SP500 +2.76%.  Nasdaq +3.11%.  Small Caps +3.5%.  Banks +2.83%.

SP500.

SP500 has broken out from its sideways consolidation.  That's a plus.

It's not out of the woods yet.  SPX faces resistance of the 50-DMA and then the KUMO Cloud.d

Let's take it one step at a time.  For now, SPX is heading up.

Commodities.

Commodities were mixed.

Commodities Index +0.39%.  Energy +1.4%.  Base Metals -0.93%.  Agriculture -0.6%.  Gold +0.24%.

After 15 minutes of trading, XJO is up strongly.  XJO +1.2%.