5/11/23. Weekly Finspiration Report

 Major Stock Markets around the world have had a great week, e.g.,  XJO +2.22%.  SP500 +5.85%.  European STOXX600 +3.41%.  Japanese Nikkei +3.18%.

STW Daily Chart (STW is an ETF which tracks the XJO)

STW broke above its Bullish Falling Wedge on Friday.  The chart had already given two "buy" signals, the first on Wednesday when the DZ Stochastic crossed above its lower band, and then the second one on Thursday when we had a double Supertrend "buy" signal. 

Friday was a heavy volume day which spiked the Force Index and the Volume Index to high levels.  That usually occurs when the market is setting up for a consolidation or pull-back.

Given Friday's big gain on the SP500, it seems likely that the XJO will hit Horizontal Resistance and go into consolidation or pause mode.

SP500 Daily

 Force Index gives good divergence signals.  That played out this week, when SP500 began a counter-trend rally on Monday after a good positive divergence signal appeared on the Force Index the previous week.

SP500 has had a big rise this week and is now at horizontal resistance and resistance from the 50-Day MA.

Expect consolidation or a pull-back in the coming week.

Is this a dead-cat bounce?  

We never know until after the fact.  At this stage we have a counter-trend rally.  We need to see a definite uptrend form with a higher low and a higher high on the SP500.  Given the strength of the current rally - that seems likely after the market absorbs some of the current rise.

Sector Performances this week.

The place to be this week was in Materials, esp. the big miners.  XMJ up +0.87%.  That was the only positive sector.

 

Resurgence of Property continued this week, XPJ +6.88% followed by Information Technology up +4.51%.  Those are two interest rate sensitive sectors - buoyed by suggestions that the Fed. may have reached the end of its interest rate hikes and no rise in Ozzie rates this week.  IT also received a big boost by Block (SQ2) rising by >25% on Friday.  XPJ and XIJ were the worst performers the previous week.

Sector Momentum 

 If a sector is in a counter trend rally, then the Daily RSI is above the Weekly RSI, but Weekly RSI is below the Monthly RSI, then I assume that the Sector is in a counter trend rally.  That doesn't mean it can't develop into a full blown up trend.  That would require the Weekly RSI to be above the Monthly RSI - it just hasn't happened yet.  It might on might not.

SECTORS in Counter-Trend Rallies:  Financials, Materials, Information Technology, Communications Services, Health, Staples, Property, Industrials.  XJO and Composite Bonds are also in Counter-Trend Rallies.  Sector closest to develop a full blown up trend is Property.

SECTORS in Down Trends:  Energy, Utilities.  Gold Mining is also in a down trend.

No Sectors are registering an up-trend.

100 Leader Stocks above their 200-Day, 50-Day and 10-Day Moving Averages.

• Above their 200-DMA:  last week 34%, this week 36%.
• Above their 50-DMA:  last week 12%, this week 32%
• Above their 10-DMA:  last week 19%, this week 81%.

Stocks above 10-DMA is into overbought territory (above 80%) so the market could see some consolidation or a pull-back.

Long Term Market Signal.

 

My long-term Market Signal is based on the NeewHighs-NewLows Cumulative Chart with a 10-Day MA.  When the chart moves back above its 10-Day MA a "buy" signal is given.  It is usually reliable for long term investors.  It did have a whipsaw Aug/Sept this year but that is a rare anomaly.

The chart is currently in a steep down-trend.  New Lows are, however, rapidly disappearing, so we could get a new buy signal in the near term if the market continues to make ground.

Conclusion.

 

The Australian market has risen strongly this week - perhaps a little too strongly.  It probably needs a consolidation before (if) it is to resume its up trend.  If a higher high and higher low appears on the XJO/STW Charts, that would provide a sound medium term "buy" signal.  Given the strength of this week's rise with strong volume - I think we will see a new uptrend develop. 

 

Good Luck.