12/3/23. Weekend Report - The Week That Was. Week Ended 10/3/23.
XJO Monthly Chart.
We've had nearly two weeks of trading in March for the XJO, currently down -1.57%.
So far, the Index is above 50-MMA, 200MMA, Supertrend (7/1.5). It is sitting on the 8-Month EMA. A monthly close below that would be bearish.
Monthly RSI is at 51/25. 50 represents a dividing line between bullish and bearish.
XJO Weekly Chart.
In the past five days, XJO fallen -1.91%.
XJO began to fall five weeks ago at a major resistance level.
In very big round numbers, major weekly support is around 7000. XJO finished at 7145.
XJO Daily Chart.
The shaded horizontal rectangle represents my preferred support zone for the XJO. It is now down to that level. No guarantees - the market can do whatever it wants to do. If that zone fails, then the next important support level is the 200 Day MA, at 7010 - close enough to my big round number of 7000.
Last week, in my report, I stated: This looks like the start of a good short-term upside rally. Well, it turned into a very short short-term rally - up on Monday and Tuesday. Then, on Tuesday night J. Powell took away the punch-blow with talk about raising interest rates for longer, Wednesday saw the XJO fall -0.77%. Thursday night in the U.S. news came out that a medium sized regional bank was failing, and the XJO fell on Friday, -2.28%. Usually after such a big drop we get some sort of a pause, even an upside move, but the XJO has a lot of work to do to get back to short-term bullish.
Weekly Changes in Sectors.
The two worst performing Sectors were Materials -5.71% and Energy -6.13%. Those two Sectors were impacted by very large companies (BHP, RIO and WDS) going ex-dividend. But that doesn't explain all of the poor results in XMJ and XEJ.
Financials (XXJ) didn't help the bullish case by being down -0.83%.
So both of the two largest Sectors 9XMJ and XXJ). making up about half of the XJO. were down significantly.
Six out of eleven sectors were up, with Defensives figuring prominently in that group (XTJ, XSJ, XUJ).
Below is a Weekly Chart for XMJ (Materials).
Solid support lies in the zone 17400-17500. XMJ finished the week at 17731. So support is not far away.
NewHighs-NewLows.
With two bullish days on Monday and Tuesday, the 3-DMA of NH-NL pushed back above the 20-DMA. But the latter part of the week saw the 3-Day MA fall again below the 20DMA. That's a sign for long-term investors to remain defensive.
Stocks v Bonds. Relative performance.
This is a reasonable picture of bullish and bearish status of the market. It's probably a good idea for medium term investors to remain bearish on stocks while this chart remains below zero.
% of Stocks above key moving averages.
1. % of stocks above 10-Day Moving Average: Last Week 40%, This Week 25%.
2. % of stocks above 50-Day Moving Average, Last Week 55%, This Week 47%.
3. % of stocks above 200-Day Moving Average, Last Week 61%, This Week 56%.
Last time Stocks > 10DMA were below 20% (currently 25%) was in September last year, which marked the start of a bullish rally. So we may not be far off a "bottom".
Conclusion.
The failure of a medium-sized bank in the U.S. is the first since the GFC in 2008. This event now becomes a "black swan" - an unpredictable event of serious consequences.
There is no way of knowing the severity of such an event. It's probably best to wait a few days and see how this pans out.
I think we're not far off a "bottom" - but the market doesn't care what I think - watch what happens in the charts.
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