19/2/23. Weekend Report - The Week That Was. Week Ended 17/2/23.
XJO Monthly Chart.
After almost three weeks, XJO down so far -1.74% stalling at the top of the strong January candle. XJO has also reached a zone where it has failed in the past.
So far, the Index is above the 8-MEMA, Hull MA13, 50-MMA, 200MMA, Supertrend (7/1.5). Not much damage done yet.
Monthly RSI is at 55.26. 50 represents the dividing line between bullish and bearish.
XJO Weekly Chart.
XJO began to fall two weeks ago at a major resistance level.
8-Week EMA has turned down, which is bearish. Hull MA13 and Supertrend remain in bullish configurations, so not a lot of damage done yet.
Weekly RSI is at 56.87 - bullish but falling.
Stochastic was showing a negative divergence and has now turned down below its signal line. That could mean more downside.
XJO Daily Chart.
XJO was in a strong up-trend in January. It is currently in a short-term down-trend.
Daily RSI has fallen below its mid-line of 50. That's bearish
The indicator overlays on the chart (8-DEMA, Hull MA and Supertrend) are all negative. The chart remains, however, above the longer term MAs: 50 and 200. This may be a pull-back within the longer up-trend.
Monthly, Weekly and Daily RSIs. - Sectors + XJO + Gold + Composite Bonds.
Only four sectors are above 50 on the One-Week RSIs.
Bullish sectors with RSIs arranged in ascending order are: XDJ, XIJ, XSJ. That's the same as the previous week
Sectors in negative mode (Daily RSI below Weekly RSI, Weekly RSI below Monthly RSI) XXJ, XMJ, XEJ, XUJ. That's eight out of eleven sectors.
Sectors in pull-back mode are: XHJ, XPJ, XNJ, Gold (an industry group within XMJ) is alsoin pull-back mode.
NewHighs-NewLows Cumulative.
NH-NL Cum is represented by the blue line. It is now marginally below the 10-DAY MA but remains well above the 21 and 34 Day Moving Averages. That's a warning signal - it might be time to take defensive action for long-term investors.
I've developed another long-term metric "StrongStocks-WeakStocks" which is similar to NH-NL but gives signals a little earlier than NH-NL SS-WS is up for the 14th week in a row and has moved well above its 5-Week MA. This week there were only 22 Strong Stocks compared to 6 the previous week. Weak stocks rose to six.
While this remains above its 5-Week MA, long-term investors might ignore the NH-NL chart.
% of Stocks above key moving averages.
1. % of stocks above 10-Day Moving Average: Last Week 26%, This Week 42%.
2. % of stocks above 50-Day Moving Average, Last Week 61%, This Week 61%.
3. % of stocks above 200-Day Moving Average, Last Week 71%, This Week 70%.
Stocks above 200-Day MA have fallen from 71% to 70% but remains at the 5-Week MA.
The short-term metric has risen strongly this week, so breadth is not as poor as the XJO might suggest.
Conclusion.
Daily chart of XJO was in a strong uptrend. That has now now reversed into pull-back mode.
The long-term trend, however, is still bullish with higher highs and higher lows.
I've remarked on my daily reports that a "hidden divergence" is in play on the XJO. That's a continuation signal. We need to see a strong bullish candle on the daily chart to confirm a change from downside back to upside.
I'm still sanguine about the prospects of our market. I think this is the pull-back we had to have (apologies to Keating) after a strong January. A lot of stocks are getting back to levels where an upside move can be expected. Short term breadth has improved. But, until proven otherwise, the short-term trend is down.
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