Mon. p.m. 6/12/21.  XJO was flat today.

XJO up just +0.05% after being in negative territory for most of the day.

The longer lower wick on today's candle shows the intra-day buying.  But the range today was more or less inside the range of the previous day's candle.  The doji indicates indecision.

We can see that the XJO is consolidating at a previous reversal (up) back at the Sept/Oct.

Not shown on this chart is the 200-Day Moving Average which is providing support.  If that fails we should see much lower prices.

Breadth today was poor.  NH-NL was -30.

Cum NH-NL is bearish:

Cumulative Advances-Declines continues to collapse.

European markets are currently doing well.  German Dax up about +1% and UK FTSE up about +0.8%.  US Futures are on the rise currently up about 260 points.  But it is early in the evening.

 Weekly Wrap, Week ended 1/12/21.  XJO at crucial level.

XJO Monthly Chart:

The monthly chart remains in a long-term up trend.  If it breaks below the 8-Month EMA (grey-blue line), that would be a sell signal for long-term investors.

XJO Weekly Chart:

PRT Bands remain bullish (yellow), but other indications are negative.  Supertrend (1.5/7) is bearish and the Schaff Trend Cycle is bearish.  

The short-term line is close to crossing below the medium-term line.  A negative cross-over would throw the banks into bearish territory.

Daily XJO chart:

This week, XJO broke below its trading range and the short-term trend is down.

The chart is consolidating at the 200-Day Moving Average - a key level for traders and investors.  A break below that would be bearish for the market.

Intra-day buying has been coming into the market in recent days - that's shown by the long lower wicks on daily candles, so this may be ready to move back to the upside.

A short-term positive divergence on the CCI also suggests a move to the upside.  That's often a good leading indicator, but not infallible.

One Week Sector Changes:

Only three sectors were up this week.  But, importantly, two of those were the biggest sectors.  Materials (XMJ) +1.26% and Financials (XXJ) +0.59%.  Health -3.23%, Consumer Staples -2.82% and Information Technology -2.5%.  Interestingly, two of those were Defensives, so we seem to be seeing a switch out of Defensives and into Risk-On stocks.  That's a positive development. 

(Later in this report I'll show charts for BHP and CBA the biggest stocks in Materials and Financials). 

NewHighs-NewLows Cumulative.

For long-term investors, this is one of the most important charts to watch.

The Cum NH-NL has now closed below its 10-Day Moving Average for the first time since May, 2020.  This chart has kept the long-term investors in the market for 18 months, but is now flashing a sell signal.

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Stocks in the ASX100 above the 200-Day MA.

% of ASX100 stocks above the 200-Day MA was at 57% this week.  That's down one on the previous week.  It remains above the 50% mark, so it remains bullish although clearly falling.  

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 ranging from long-term to short-term.  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 negative result in the SS v WS 5 SS and 11 WS.  This is used by me to calculate a cumulative SS-WS chart.  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 5-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.  It once again shows a negative development.

BHP Chart.

The PRT Bands are on the verge of switching from blue to yellow.

BHP has been under accumulation for nearly two months, it has broken out above resistance set up in mid-September and is well above the 50-Day Moving Average.

This may be a counter-trend rally, but given the long accumulation phase, BHP is likely to head much higher in the medium term.

CBA.

CBA was in a steep down-trend for most of November, in concert with the other big four banks.

That seems to have come to a stop on Thursday when CBA rose +2.15%.  That rise was well anticipated by a positive divergence on the CCI.  On Friday, Supertrend (1.5/7) switched from bearish to bullish.

This may only be a counter-trend rally, but we are coming into a seasonally favourable time for stocks, so CBA might have plenty of legs left in this run-up.

Conclusion: Fear continues to plague our market this week with Omicron taking central stage. 

The XJO charts show the Index at a critical stage on monthly, weekly and daily time frames.  Some of my favourite longer term indicators (Cum NH-NL and Cum SS-WS) have given sell signals.  They have been good guides in the past, particularly before the 2020 bear market.

We are, however, get signs that the "smart money might be getting into this market" with intra-day buying showing up this week, and a switch out of defensives into risk-on sectors.

I'll reiterate the four choices longer-term investors have:

1. Go to cash and hope to pick the bottom and then re-enter the market.  That's always a difficult trick to pull off.
2. Adopt a defensive posture by altering allocations between bonds and stocks if you have a diversified portfolio.  
3. Hedge your portfolio by buying Bear,  the ETF which reacts inversely to the XJO resulting in a neutral position.
4. Hang on for grim death and hope this all just blows away very quickly

Financial advisers will usually opt for No.4.  (You may be able to come up with more options.). It's up to you and your level of tolerance for risk.  Option 4 looks a likely position at this stage, but if the 200-Day Moving Average is decisively broken, one of the other three options might be deployed.

 Sat. 4/12/21.  Weak Friday performances from ASX200 and American Indices.

Yesterday in Australia:

In early trading yesterday, XJO was up more than 1%, but that faded for most of the day to be up +0.22%.

XJO remains sitting on key support of the 200-Day Moving Average.  The short-term trend and the medium-term trend remain down.

Cautious traders should wait for the short-term line to finish above the 8-Day EMA.  

XJO faces a lot of overhead resistance before the trends change to positive.

Overnight:

Dow Jones -0.17%.  SP500 -0.84%.  Nasdaq -1.92%.  Small Caps -1.92%.  Banks -2.5%.

BKX (Banks) show an imminent x-over of the 20-Day MA below the 50-Day MA.  That would be taken as a bearish event for the Banks.

All five Indices are below their respective 50-Day MAs.

In intra-day trading, Dow Jones had a strong up move of about 300 points in the last hour of trading almost taking it back into positive territory.  Coming on the last day of the week, that's a show of confidence by the Dow Jones.

Daily SP500.

The late buying in the Dow Jones was also evident in the SP500 but without the same dramatic impact.  SP500 finished down -0.84% and closed at horizontal support and the 50-Day MA.  It still has a lot of work to do to change the short and medium term trends to the bullish side.

Weekly SP500.

The Weekly Chart of SP500 shows that the long-term trend remains up.

The Index remains within its up-trending channel but at its lower edge.  That suggests we'll see a bounce to the upper side, but a break lower would be bearish.

Commodities.

Commodities Index +0.1%.  Energy -0.59%.  Base Metals +0.53%.  Gold +0.84%.

The Australian market on Friday pre-empted the weakness in America later in the world-wide trading session.  The weakness in America will probably translate to consolidation or a mild pull-back in the Ozzie market on Monday.

Fri. a.m. 3/12/21.  Santa put the Elves on Double Time last night.

Overnight. 

Dow Jones +1.82%.  SP500 +1.42%.  Nasdaq +0.83%.  Small Caps +2.93%.  Banks +3.42%.

Dow Jones rose 618 points.  According to Big Charts, that is the best points rise this year.

I'd suggest that puts the current pull-back at an end.

SP500.

We can now see that the break of support on Wednesday was a false break and capitulation by the "weak hands".  Thursday's action takes the chart well above the 50-Day MA and horizontal support from the Aug/Sept top.  Such an aggressive move indicates institutional action (the Big Boys).  When they step in - they're usually right.

Aggressive traders will now buy this rebound.  More cautious ones might wait for the Short Term Line to move above the 8-Day EMA.  That would confirm the end of this pull-back.

Commodities:

Commodities Index +0.88%.  Energy +1.64%.  Base Metals -0.15%.  Gold -0.55%.

Iron Ore -3%.

Overnight Oz Futures +0.7%.

We should have a much better day and I think the Banks will shine brightly.

Thu. p.m. 2/12/21. XJO down just a little today.

 XJO finished down -0.15% after being down -0.9% early in the trading day.

XJO has seen intra-day buying coming into the market on three of the past four days.  That makes me much more optimistic about the state of affairs as the Index is also consolidating right at the 200-Day Moving Average.  That's often taken by traders/investors as the line between a bull and a bear market.  A clear break of the 200-Day MA would probably be the catalyst for a lot more selling.

The short-term and the medium-term trend remain down.

Breadth also remains a concern.  Advances/Declines came in today at 0.34% which is bearish.

Here's the Cumulative Advances-Declines chart:

It continues to fall sharply.  It might be best to see an improvement in this chart before entering the market.  But judicious nibbling at selective stocks might pay handsome dividends.

Thu. a.m. 2/12/21.  Europe up, Wall Street down.

Overnight. 

It was a wild session on Wall Street with Dow Jones swinging through 1000 points.  For most of the session, Wall Street followed Europe up, but afternoon trading saw a change in sentiment and Dow Jones finished down 462points.

Dow Jones -1.34%.  SP500 -1.18%.  Nasdaq -1.83%.  Small Caps -1.53%.  Banks -1.25%.

20-Year Treasury Bonds up +0.62%.  

SP500.

SP500 has now broken dual support, the 50-Day MA and major horizontal support.  Still no positive divergences showing up on important leading indicators such as the CCI.

SP500 has had two days in a row of large downside moves.  I think we can expect some consolidation here, barring more bad news.

SP500 is now bearish in both the short-term and medium-term.

Commodities.

Commodities Index -0.87%.  Energy -1.6%.  Base Metals -1.15%.  Gold +0.4%.

Iron Ore +1.3%.

Overnight Oz Futures -1.1%.

The Australian market can expect another day of poor performance.

 Wed. p.m. 1/12/21.  XJO down modestly.

XJO was down -0.28% today.  Range was relatively narrow and the XJO continues to hold above the 200-Day MA.

The next move may prove decisive.  If we get a big upside movement, then this pull-back could be over.  A break below the 200-Day MA would spell further downside.

Breadth was again bearish today.  NewHighs -NewLows came in at -21 and Advances-Declines came in at -573.  Until we see an improvement in those breadth figures it should prove wise to stay defensive.