Finspiration Australia. Objective analysis of the Australian and overseas stock markets.

 Fri. 21/1/22.  America started positively, then imploded.

Overnight.

Dow Jones -0.89%.  SP500 -1.1%.  Nasdaq -1.3%.  Small caps-2.12%.  Banks -1.65%.

At noon, indices were well on the way to erasing all the losses of the previous day.  Then the slide began which accelerated in the last hour of trading sending the indices into bearish territory.

SP500.

SP500 is now in bearish territory below the Ichimoku Cloud.   Next stop - the 200-Day MA?

RSI is now oversold at 31.6.  Below 30 usually results in a rebound.

Wait.

Commodities.

Commodities Index -0.35%.  Energy -0.69%.  Base Metals continued to rise relentlessly +1.69%.  Gold -0.25%.

Iron Ore up again +2.6%.

After 25 minutes of trading today, XJO is down -1%.  

 Thu. p.m. 20/1/22.  Oz market defies fall in America.

XJO up today +0.14%.

XJO found support at the 200-Day MA and the top of the Ichimoku Cloud.

It was down early in trading, but intra-day buying took the Index back up into positive territory.

Despite the positive final result, our market was seriously skewed.  Only four sectors were up.

     Energy +0.8%

     Materials +3%

     Health +0.3%

     Utilities +0.5%

The positive result was clearly dependent on the resources.  Utilities tends to benefit from increases in the price of Energy.

Unless we see a return to favour for the XXJ (Financials), this market remains fragile.

Today's action was promising. 

Despite what you hear on the press, XJO often leads overseas markets.  Today's action might be a case in point.  Currently, both German and UK are showing solid if unspectacular gains.

I feel confident that the current pull-back is over.  But we need to see follow-through buying tomorrow.

Technically, that's a positive result.  We need to see upside buying tomorrow.

Finspiration Australia. Objective analysis of the Australian stock market and overseas markets.

 Thu. 20/1/22.  American market finishes well down.

Overnight.

Dow Jones -0.96%.  SP500 -0.97%.  Nasdaq -1.15%.  Small Caps -1.74%.  Banks -3.14%.

Most of these indices are approaching or are at support levels.  CCI on the Nasdaq is showing a positive divergence.  We could see a bounce to the upside in the next day or two.

SP500.

SP500 is close to multiple supports:  horizontal support from December lows, congestion zone back in late August and the bottom of the Ichimoku Cloud.  That's powerful support.  I'd expect that support to hold.

If it doesn't, then the SP500 will have formed a large head-n-shoulders formation which would probably lead to much lower levels.

Also on the plus side, the Index is well oversold with an RSI reading in the low 30's.

Commodities:

Commodities Index +0.55%.  Energy -0.63%.  Base Metals +0.96%.  Gold +1.59%.

The big jump in the Gold price is evidence of extreme fear entering the market.  That's not necessarily a bad thing.

Iron Ore +2.3%.

With Base Metals and Iron Ore both positive - that's a plus for our miners.

After 30 minutes of trading, XJO is down only -0.05%.  We could well end up positive today.

Finspiration Australia. Objective analysis of the Australian stock market and overseas markets.

 Wed. p.m. 19/1/22.  XJO breaks down through support.

XJO was down heavily today, -1%.

The index is almost back to the 200-Day MA.  It has found support at that level several times now since the beginning of December.  Everytime a support level gets tested, the weaker it becomes.

For now, after such a big down day, we can expect a bounce to the upside.

The spectre of higher interest rates continues to haunt the market.  Rarely can the Federal Reserve hike interest rates and create a soft landing.  Maybe this time is different?  Powell in his recent testimony said fighting inflation is the key focus of the Federal Reserve, which doesn't sound too much like a soft landing is a concern.

Breadth today was very poor.  Advances/Declines 554/949.  Ten sectors down, one sector up.

VIX hasn't climbed much despite the big drop in the index.  VIX readings for the past four days are:  13.66, 13.53, 13.64, 13.71.  Not a lot of change for this volatile index.

This is important, as VIX depends on a formula worked on the number of puts/calls being bought/sold.  If lots of puts are being sold (sending VIX higher, Market Makers (who sell the puts) have to hedge their books by selling stocks and futures, helping to drive the market lower. Market Makers (usually backed by big institutions such as banks) tend to control the market.  If the market drops heavily, and VIX doesn't move much, then the fall can be attributed to retail investors (the dumb money) and they are usually wrong.

So today's big drop could be a furphy.  We'll see.

European markets opened well on the negative side but are since rebounding fairly strongly.  Still too early to read anything into it, but promising.

See you all in the morning.

Finspiration Australia. Objective analysis of the Australian stock market and overseas markets.

Wed. a.m. 19/1/22.  Nasdaq breaks below 200 DMA.

Overnight: 

Dow Jones -1.51%.  SP500 -1.84%.  Nasdaq -2.6%.  Small Caps -2.63%.  Banks -2.4%.

Nasdaq.

Nasdaq has broken below its 300-Day Moving Average.  That's often taken as a sign of a bear market and the tech sector should be avoided until it is back above its 200-Day MA.

Using Ichimoku, I'd avoid the tech sector until the chart is above the "cloud".

Positive divergence on the CCI suggests we could see a rebound in the near future.

Commodities.

Commodities Index +0.78%.  Energy +1.31%.  Base Metals +0.4%.  Gold -0.17%.

Iron Ore +2.7%.

Overnight Oz Futures -0.9%.

To state the bleeding obvious - we'll open well down this morning.

Finspiration Australia. Objective analysis of the Australian stock market and overseas markets.

 Tue. p.m. 18/1/22.  XJO flat today.  Waiting for U.S. market to open.

XJO was down a little today -0.11%, essentially flat.

In the short-term, XJO remains within its tight sideways consolidation.

Such sideways consolidations usually suggest a continuation of the short-term trend.  After the big down-day on Thursday, 4 Jan, that suggests another move to the downside.

Most sectors recorded small changes one way or the other today.  Nothing much can be read into sector changes today.

Our market has basically gone to sleep over the past two days while the U.S. market is in-active.

We should see some more dramatic moves tomorrow.

Currently, European markets are negative.  Germany down about -1% and UK down -0.7%.  

The U.S. is always the wild card.  Europe can be down.  U.S. opens lower, and then rebounds.

Let's wait and see how this plays out.

Finspiration Australia. Objective analysis of the Australian and overseas stockmarkets.

 Tue. a.m. 18/1/22.  Europe up, U.S. closed.

Overnight.

The U.S. stock and bond markets were closed for MLK Holiday.  Europe rose.  German DAX was up +0.3% while UK FTSE was up strongly +0.9%.  European Stoxx600 rose +0.7%.  Toronto Composite was up +0.8%.  Canada, like Australia, has a strong resources segment, but the composition is different from Australia's.  While Australia is skewed to iron ore, Canada is skewed to energy.  The Toronto index has a degree of correlation with Australia, but it is not strong.

Commodities.

Oil prices were generally higher last night.  U.S. Nymex was up +0.6%.  Copper up modestly +0.2%.  Gold up +0.1%.  Iron Ore fell -2.2%.  That is likely to impact the prices today for RIO and FMG, the two big miners most dependent on Iron Ore.  BHP is more diversified.  BHP up in the U.K. +1.4%.

All of the above suggests a modest positive opening for the XJO.  At 10.06 a.m. Eastern Summer Time, XJO was up just 3.2 points up - not enough to move the %age indicator.