23/10/22.  Weekly Wrap - Week ended 21/10/22.

XJO Monthly Chart.

XJO continues to hold at support of the 50-Month Moving Average.

It remains in a down-trend, below the 8-Month Exponential Moving Average and below both Supertrend Line.  This down-trend started a year ago.

The average bear market is 289 days - or about nine months.  We're beyond that now - so we could see a rebound soon.  It may have started this week.  A week ago, the monthly candle was blue, this week it has switched to yellow (bullish).

XJO Weekly Chart.

XJO had a good week this week with the index up +1.63%.  The two Supertrend Lines on this chart are opposing colours - one blue, one yellow, i.e., indecision or non-trending.

XJO Daily Chart.

XJO is in a short-term up trend, with both Supertrend Lines bullish.  The chart finished above the 50-Day MA.  A bounce on Monday (likely) should result in a bullish upside move confirming the 50-DMA as support.  Next trip might see a test of the 200-Day MA.

The XJO in three time frames (monthly, weekly, daily) are now out of sync.  Monthly - bearish, weekly - indecisive, daily - bullish.  

SP500 Daily.

SP500 had a big move on Friday night, up +2.46%.  That took the index up above the 50-Day MA after a two-day bull flag.  That should flow on to Australia on Monday.

ASX Sector Results for this week.

It was a good week for the XJO with eight out of eleven sectors up.   The two resource sectors were poor this week, Materials -0.87% and Energy -0.37%.  Best sectors were Property +6.84% and Utilities +5.56%.  

Relative Strength of Sectors.

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.)

 Seven sectors out of eleven are above the 50 level - that represents a bullish line.  That's a dramatic improvement over the previous week when only two sectors out of eleven were above 50.  Leadership is held by Financials (XXJ) - that's the largest sector in the ASX so that's positive result.

This week saw XXJ move clearly above the 200-DMA - this the line between bullish and bearish - that's a positive development from the largest sector in the ASX.

NewHighs-NewLows Cumulative.

  

This is a metric for the long-term investor.  While NH-NL Cumulative remains below its 10-Day Moving Average, it is best for long term investors to remain cautious and defensive regarding the market.

% of Stocks above key moving averages.

1.  % of stocks above 10-Day Moving Average: Last Week 35%, This Week 64%.  

2.  % of stocks above 50-Day Moving Average, Last Week 22%, This Week 43%.  

3.  % of stocks above 200-Day Moving Average, Last Week 21%, This Week 33%.  

Those metrics reflect the good rally we saw in the XJO this week.  It would be nice to see No.3 above 40%.  The short-term metric (No.1) is still below oversold - so we can expect more upside.

This week, the long-term metric (stocks above the 200-DMA) broke up above its 5-week moving average.  It is now in an up trend.

Conclusion.

 

Overall, the three time frames for the XJO are out of sync.  Short-term we are bullish - and above the 50-Day MA.

I'm expecting more upside in the near-term.

Coming up this week are a couple of market moving events, both the RBA and Federal Reserve (U.S.) hand down interest rate decisions.

Reporting season in the U.S. and Australia also continues.  Reports from major companies can jerk the market around.

Stay Safe