Wednesday, November 10, 2021

 Wed. p.m. 10/11/21.  Choppy trading in today's ASX200 resulted in a small loss.

XJO down today -0.24%:


XJO is failing at overhead resistance where it turned down in late October.  The Index appears to be in a sideways trend.  A break above resistance at 7472 would see a resumption of the uptrend.

The medium tern remains bullish.

Short-term swing traders will look to buy the dip.


Tuesday, November 9, 2021

Wed. a.m. 10/11/21.  American winning run finally ends.

Overnight:


Dow Jones -0.31%.  SP500 -0.35%.  Nasdaq -0.6%.  Small Caps -0.25%.  Banks -0.56%.

"Overbought can remain overbought for longer than you can imagine" is well illustrated by the current bull rally.  Using the Slow Stochastic as a guide, the three major indices have remained "overbought" for about three weeks.  Such runs occur much more frequently than most people think.

SP500:


Two doji cadlesticks followed by a bearish candle stick suggests more downside.  The short-term line on the PRT Bands has now turned down for the first time since 13 October.

The chart remains in the medium term bullish zone.  Look to buy the dip.

Commodities:


Commodities Index +0.8%.  Energy +1.21%.  Base Metals -0.48%.  Gold +0.49%.

Iron Ore -1.5%.

Overnight Oz Futures +0.3%.  That looks like a furphy as the XJO, after 15 minutes of trading is flat, down 0.8 points.

 Tues. p.m. 9/11/21.  XJO down in choppy trade.

XJO Chart:


XJO down today -0.24%.  That doesn't sound like much, but it completes a bearish three-day pattern, up candle, doji candle, down candle.  Expect more down side.

XJO remains in a trading range.  Look for a break-out from the range, 7474 - 7312.

I'll be surprised if we see a break to the downside, but I've had plenty of surprises in this life.


Monday, November 8, 2021

 Tue. a.m. 9/11/21.  Modest gains in New York - but new records.

Overnight:


Dow Jones +0.29%.  SP500 +0.09%.  Nasdaq +0.07%.  Small Caps +0.02%.  Banks +0.53%.

The three major indices all show double doji candlesticks coming at the top of long up-trends.  That's a degree of indecision rarely seen.  The next movement is likely to be down.

SP500:


SP500 has now reached the top of its trading channel.  It can go higher, but the probabilities are to the downside.

Commodities:



Commodities Index +0.61%.  Base Metals +1.55%.  Energy +0.72%.  Gold +0.36%.

Gold:


The above longer term chart of Gold shows that it is at a critical point.  It could break the down trend line from mid-2020, and that it give it the opportunity of breaking horizontal resistance where it has been turned back three times since June this year.  Watch this space.

Iron Ore: +1.2%.

Overnight Oz Futures +0.1%.

It looks like another lack-lustre day today for the XJO - with the main focus on resource stocks which have taken a beating in recent weeks.  BHP up +2.2% overnight in the U.S. Rio up +2.75%

 Monday. p.m. 8/11/21.  Flat market today in Australia.

XJO down -0.06% today in choppy trading.


XJO today retreated from horizontal resistance.  It is now in a trading range 7312 to 7472.

Wait for a break-out from the trading range.

Today's candle forms a "tweezer top".  It seems to be emulating the triple top back in late October.

If that's the case, we can expect a test of support at 7312.

Today, breadth as measured by Advances/Declines is still bearish.  This is a good leading indicator.



Saturday, November 6, 2021

  Weekly Wrap, Week ended 5/11/21.  Spectacular rebound by the XJO

Here's the Weekly XJO Chart:




The weekly candle is a bullish engulfing candle completely nullifying the previous bearish engulfing candle.  XJO up this week +1.82%.  The long-term trend has now been bullish for the past year.

Daily XJO chart:




The rebound this week has been spectacular, largely due to the last three days of the week.

But, XJO appears to be in a range marked on the chart.  It needs to get above horizontal resistance to continue the bullish move of this week.

The 20-Day MA has crossed above the 50-Day MA which is promising.

The medium term trend remains bullish (PRT bands are yellow), so position traders should maintain their current holdings.

One Week Sector Changes:




 

Only one sector was down this week, Energy -1.9%. The relative strengths of the various sectors should, however, give pause for thought.  The four best performing sectors were all defensives Telecommunications +4.64%, Property +4.23%, Health +3.93%, Consumer Staples +3.76%.

The usual chief drivers of our market are, at best, weak, and, at worst, negative.  Financials +0.57%,  Materials +0.3% and Energy -1.9%.

That's not the sector composition we expect to see in a strongly bullish market.

NewHighs-NewLows Cumulative.

For long-term investors, this is the most important chart to watch.





While the NH-NL remains above its 10-Day MA, long-term investors might feel comfortable in holding their investments.  If it breaks below the 10-Day MA, they might then take defensive action.

This chart has kept investors in this long bull market dating back to mid-2020.  It looked precarious recently when the XJO pulled back, but the NH-NL CUM didn't cross below its 10-Day MA.  The two lines are once again pulling apart from each other.  Long-term investments in Index ETFs look safe at this stage.

Advances-Declines Cumulative 




This is another chart which should give pause for thought.  A-D Cum provides one of the best leading indicators for danger in the market.  It hasn't recovered nearly as well as the XJO might suggest.  It remains well below its 10-Day MA.  The XJO is well above its 10-Day MA, while Advances-Declines is well below its 10-Day MA.  With the main drivers of the market this week being defensive sectors and a weak A-D Cumulative, the XJO may be sending a deceptive message about its bullish qualifications.

Strong Stocks v Weak Stocks.

This is a development of my own making.  I mark up all the stocks in the ASX100 according to seven criteria.  Any stocks positive on all 7 criteria are regarded as Strong Stocks (SS).  Any stocks negative on all 7 criteria are regarded as Weak Stocks (WS).

This week saw a dramatic turn-around in the SS v WS.  In the previous week the Ratio was 4/11.This week the Ratio of SS v WS was 20/6.  

This is a measure similar to the NH-NL Cum (above).  It's a good guide for position traders rather than long-term investors.  While the Strong-Weak Cumulative chart remains above its 10-Week MA, position traders can continue to hold Index ETFs.  The only time this chart was in trouble this year was back in late March when XJO had a significant pullback.



Conclusion:

Our market regained its bullish credentials this week after suffering a case of the heebie-jeebies after traders attacked the bond market because of inflationary fears.

Those fears have abated this week, but remain lurking in the shadows.

The Federal Reserve announced its long-awaited taper - which didn't spook the markets and the Australian Reserve Bank maintained its long-term low-interest rate policy but jettisoned one of its bond market policies.

Our XJO is now back up to resistance, with notable cautions being issued by sector structure (tending to defensive) and Advance-Decline Cumulatives, which are weak.

I'm not convinced that our market has thrown off its fears about interest rates and inflation - but a rise above resistance should quell those fears, for the time being.











Friday, November 5, 2021

 Sat. 6/11/21.  Another day - more records in the U.S.

Yesterday in Australia.

XJO up +0.39%, but faded a little in the afternoon session.


Short-term and medium-term trends are both up.  Stay with the trend.  

Be watchful.  The chart is now at resistance where it turned down in late October.

Overnight:


Dow Jones +0.56%.  SP500 +0.37%.  Nasdaq +0.2%.  Small Caps +2.15%.  Banks +0.07%.

Dow Jones had a gap up at the beginning of trading, but the candle is a "shooting star" candle.  That combination coming at the top of a trend is often a sign of exhaustion.  It was also accompanied by heavy volume - another sign of exhaustion as weak ands buy what the strong hands have to offer.

SP500:


The trend remains up - stay with the trend.

This has been a remarkably long up-trend.  It is now seriously overbought with the RSI at 76.6.  It can go higher - but all trends must end - and this one is getting very long in the tooth.

Commodities:


Commodities Index +1.39%.  Energy +2.03%.  Base Metals +0.29%.  Gold +1.31%.

All of that looks promising for Australia on Monday.  If Oz is negative or sells off intra-day, it could mean we're pre-empting a move down in the U.S. on Monday.


Finspiration Australia. 14/11/23. Tues. Morning Report.

Mixed Results in New York.  Energy up. NAB ex-dividend today. Dow Jones +0.16%.  SP500 -0.08%.  Nasdaq -0.11%.  Small Caps -0.07%.  Banks -0...