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

       26/12/22.  Weekend Report - The Week That Was.  Week Ended 23/12/22.

 Chart Analysis on this Blog is purely descriptive.  It is written for informational and educational purposes and should not be taken as financial advice.  Do your own research or seek advice from a Registered Financial Advisor.

ASX was down for the third week in a row - not a great December so far, historically the best month of the year.  

XJO Monthly Chart.

The month of December has been doing poorly for the XJO, down so far -2.42%.  

The down-trend in the Monthly Chart may have been reversed, but the chart is giving no definite signal

The Hull MA13 and the 8-Month EMA Have both turned up.  That's significant.  Remember that Hull MA13 was the first indicator to turn bearish back in October 2021.  

The chart in December is knocking on resistance of the Supertrend (7/1.5).  That is causing the Index some problems.  It seems unlikely, with one week to go, that the XJO will be positive for December.

XJO Weekly Chart.

                                            

In the past five days, XJO has fallen -0.57%.  In the previous two weeks, the index was down -0.89% and -1.21%.  If you are a glass half-full guy, you would say that falls have moderated.

Despite this week's fall, the chart remains in a bullish up-trend and above all key moving averages.

Hull MA13 has now turned down, other MAs and the Supertrend Line remain up.  The index has formed a double bottom.  Using a standard measure rule, that suggests the XJO will make a new all time high.

XJO Daily Chart.

The chart for XJO shows that the damage to the index was largely due to a big fall on Tuesday when it fell -1.54%.

That provided a test of the 200-Day MA which proved positive as the index rose strongly on Wednesday, up +1.29%.  That took the index up to test the Supertrend (7/1.5), which failed on Friday.  The index is between a rock and a hard place.

The Gold Cross (50-DMA above 200-DMA) remains intact.  The bounce off the 200-DMA on Wednesday gives the index a bullish slant.

Relative performance of ASX YTD.

So far this year, ASX is down -9.82%.  Not a great result.  But, if this is any consolation, that's relatively better than most international indices YTD.  Brazil is the only index (+2.74%) which is positive.  Australia is about the same as (surprise, surprise) the U.K., -9.8%,  But the Ozzie is doing better than other major indices.  (The following is from FTSE Russell.)

Some Examples:  U.S. -20.51%, Japan -17.84%, Germany -24.59%, China -24.84%, Canada -13.76%.

ASX Sector Results for this week.

Three sectors were up and one flat.  Seven sectors were down.

Best this week was XUJ (Utilities), up +4.75%.  Next best was XEJ (Energy) +0.65%.  XMJ (Materials) was up a little, +0.15%.  XXJ (Financials) flat, +0.02%.

The worst performers were cyclicals, XDJ (Discretionary) -3.23% and XIJ (Information Technology) -3.22%.  Both of those are being affected by rising interest rates and inflationary pressures. As it is the second largest sector in the ASX, its big fall did a lot of damage.  

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 better guide to recent strength in the sectors. (Click here for a description of RSI.)

Eight out of eleven sectors have now fallen below the 50 RSI level.  The worst is Discretionary with an RSI of 34.8.  That makes it oversold, so it could rebound in the near future.  

The only sectors above the mid-line (50) are XMJ (Materials) 52.12, XEJ (Energy) 50.24, XUJ (Utilities) 59.12.  There is a degree of synergy between Energy and Utilies, so it is basically resources which are the best performing sectors.

XJO below 50.  That's into bearish territory.

NewHighs-NewLows Cumulative.

 

Early this month, NH-NL Cum briefly rose above the 10-Day MA but now continues to fall below its 10-Day MA.  

This is a lagging indicator but bullish signals are usually highly reliable.  This is a metric for the long-term investor. I'd like to see the 10-DMA above the 20-DMA to be confident of a long-term bull signal.  There's not much in it, at the moment, so it wouldn't take much bullish action to switch this into a bullish signa.

I've developed another metric StrongStocks-WeakStocks which is similar to NH-NL but gives signals a little earlier than NH-NL.SS-WS is up for the seventh week in a row and has moved well above its 5-Week MA.   This week there were 13 Strong Stocks and 7 Weak Stocks.  That was an increase in both Strong Stocks (+3) and Weak Stocks (+4)

Since crossing SS-SW crossing above its 5-WMA, STW (ETF for XJO) is up +4.7%.

% of Stocks above key moving averages.

1.  % of stocks above 10-Day Moving Average: Last Week 32%, This Week 36%.  

2.  % of stocks above 50-Day Moving Average, Last Week 68%, This Week 57%.  

3.  % of stocks above 200-Day Moving Average, Last Week 50%, This Week 50%.  

Both the medium-term (%stocks above 50DMA) and long-term (%stocks above 200DMA) measures remain bullish.  The short-term measure (%stocks above 10DMA) is bearish but no significant change from the previous week. 

% of stocks above the 200-Day MA fell this this week and below its 5-Day MA, but remains at the bullish reading of 50%.

Conclusion.

 

ASX had a poor week this week but downside momentum is slowing.  Daily and Weekly Charts are out of sync, Daily is bearish while Weekly is bullish.  We need to see the Daily return to bullish conditions if we are to see a strong end of year rally.

Plenty of conflicting data appear this week.  So, despite the poor net overall result, breadth remains on the cusp.

Stay Safe.