Australian Market Weekly Analysis

  Weekly Wrap, Week ended 10/12/21.  XJO rises from crucial level

XJO Monthly Chart:

XJO peaked in August, 2021.  It has since fallen September-November, but is now resuming its bullish trend in December.  This is important as it is moving up from a crucial long-term level - the 8-Month Exponential Moving Average.  December tends to be a seasonally bullish month for the market, so we may see more upside.

XJO Weekly Chart:

The weekly chart shows a wide trading range which switched the weekly trend from up to sideways.  A break above 7479 should be bullish.  A break below the 50-Week Moving Average (blue, dashed, curving line) would be bearish.

Daily XJO chart:

This week, XJO had a strong week, +1.55%.  That strength was largely generated by action on Tuesday-Wednesday.  Tuesday was up +0.95% and Wednesday was the best day for many weeks when the Index rose +1.25%.  Inevitably, some exhaustion set in with the XJO pulling back on Thursday-Friday.  The XJO now rests on the 50-Day Moving Average.  A bounce off that should be bullish.  That seems likely after the American market showed strength on Friday night (our time). 

One Week Sector Changes:

All sectors were up this week, although Information Technology (XIJ) +0.03% only just made the grade.  

The two strongest sectors were both defensives, Utilities (XUJ) +2.86% and Consumer Staples (XSJ) +3.02%.  That shows, once again, some movement into defensives which we saw a couple of weeks ago.  This seems a bit odd as defensives tend to under-perform during inflationary expectations which most analysts are declaring.  

This may be a short-term aberration.  If inflation is ongoing, we should expect sectors like Materials (XMJ), Energy (XEJ) and Financials (XXJ) to do comparatively better.

NewHighs-NewLows Cumulative.

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

The Cum NH-NL is now sitting just below its 10-Day Moving Average after a small rise this week.  A rise above its 10-Day MA would provide a re-enter signal for long term investors.   A similar indicator but reacting a little quicker than the CUM NH-NL is my CUM S-W chart.  It gave a re-enter signal this week.  

The indecisive nature of these two charts is congruent with the sideways trend noted in the Weekly XJO Chart above.  Sideways trends can produce whip-saws which are frustrating, but part of the nature of stock markets.

Stocks in the ASX100 above the 200-Day MA.

% of stocks in the ASX100 above the 200-Day MA rose this week from 57% to 60%.  That keeps it well above the bearish level of 50%.

Shorter time frames saw some dramatic rises.  For example, % of stocks above the 10-Day MA rose from a bearish 30% to 69%.  That's not so strong as to suggest that the market is overbought, so we should have more upside.

Conclusion: The XJO has been in a sideways trend for about three months.  The past week has shown promising signs of more upside.

We're coming into a seasonally favourable period - the fabled "Santa Rally" may be upon us this week.

It's important, however, to trade what you see not what you think.  Put ideas about "Santa Rally" to one side and watch the charts.  A bounce off the 50-Day MA early next week should be an important sign, but the XJO still has to break out of its sideways trend to prove its bullish credentials.   

Stock Market Analysis.

 Sat. 11/12/21.  SP500 hits new record.

Overnight:

Dow Jones +0.6%.  SP500 +0.95%.  Nasdaq +0.73%. Small Caps +0.02%.  Banks -0.2%

SP500:

SP500 reversed the bearish candle set on Thursday, broke above resistance and set a new closing record.  That's a bullish event.  Expect more upside.

Commodities:

Commodity Index +1.14%.  Energy +1.95%.  Base Metals -0.52%.  Gold +0.42%.

VIX.

VIX finished at 18.69.  Traditionally, 20 is considered the marker between bullish and bearish for the stock market.  VIX is now giving a bullish signal confirming the signal from the SP500.

BHP was up in the US, but down in little in the UK.  RIO had similar results to BHP, up in the US, down in UK.  Both stocks remain in up-trends.  Westpac and Woodside were both up in the U.S.

Our market should see a bounce off the 50-Day MA on Monday.

Australian Market Analysis

 Friday. p.m. 10/12/21.  XJO down for second day.

XJO down -0.42%.

This chart shows how choppy the market has been over the past three months.  Up, down, up, down, going nowhere.

We'll just have to wait and see how this plays out.

Fri. a.m. 10/12/21.  Major U.S. Indices fall, VIX back above 20.

Overnight.

Dow Jones -0.00%.  SP500 -0.72%.  Nasdaq -1.71%.  Small Caps -1.65%.  Banks -0.15%.

SP500.

Major resistance proved too much for the SP500.

Despite the fall, the short-term trend remains up.  The index finished at the short-term line (about 3-Day MA).  Nearby support lies at minor horizontal support of 4650 and the 8-Day EMA.  If those hold and we get a bounce, then another test of major resistance is likely.

Commodities.

Commodities Index -1.52%.  Energy -1.91%.  Base Metals -0.71%.  Gold -0.61%

BHP was down in both the UK and US but holding above the 200-Day MA.  Rio was up in both the UK and US.

Iron Ore -0.3%.

Overnight Oz Futures -0.1%.

Stock Market Analysis

 Thur. p.m. 9/12/21.  A great day for watching the cricket.

XJO down modestly today in choppy trading -0.28%.

For over two months, XJO has been in a wide range 7169-7471.  XJO is now in the top quarter of that range.  A test of the top at 7471 seems to be inevitable.  XJO finished today at 7385.

We've seen an improvement in the Cumulative Advances-Declines, but not enough to take it back above the 10-Day MA.

Despite XJO falling today, VIX also fell, and substantially.  A substantial fall in VIX while XJO also falls often results in a positive result next day.

At this stage, the short-term trend on the XJO is up.  The medium-term trend is sideways, and the long-term trend is up.  On balance, I'd stay with the long-term trend.

Stock Market Analysis

 Thur. a.m. 9/12/21.  Major U.S. Indices positive results.  Europe down.

Overnight:

Dow Jones up a little +0.1%.  SP500 +0.31%.  Nasdaq +0.64%.  Small Caps +0.46%.  Banks -0.84%.

European STOXX600 -0.59%.

SP500.

Last Night's Action takes the SP500 up to major horizontal resistance.  We may see consolidation or a pull-back here.  That will probably provide a "buy-the-dip" opportunity.

Commodities:

Commodities Index +1.34%.  Energy +2.01%.  Base Metals +1.29%.  Gold +0.05%

BHP and RIO were down last night on both the UK market and the US market.

Overnight OZ Futures down -0.36%.

It seems the Oz market be consolidating today.  It could, however, be more positive than negative given the positive results in the U.S.

 Wed. p.m. 8/12/21.  Another strong day for the XJO.

XJO up today +1.25%.  That's the best result in over two months.

Supertrend (1.5/7) is bullish switching from blue to yellow.  Short-line is above both the 8-Day EMA and the medium-term line.

Schaff Trend Cycle has turned bullish.

We've now had four up days in a row with the past two days very strong.  XJO is at a minor resistance level, so we might see some consolidation here, but this looks destined to test major horizontal resistance at 7472.  XJO finished today at 7405.