Finspiration Australia.

 Wed. a.m. 2/2/22.  U.S. stocks up again.

Overnight.

Dow Jones +0.78%.  SP500 +0.69%.  Nasdaq +0.75%.  Small Caps +0.75%.  Banks +2.39%.

SP500

After three days up, SP500 is now at its first serious resistance level, 20-Day MA and the lower edge of the Ichimoku Cloud.  Expect a pause here or a slowing in upside momentum.

Commodities.

Commodities Index +0.4%.  Energy +0.1%.  Base Metals +1.19% (bouncing off support of the 20-Day MA), Gold +0.08%.

Iron Ore - no change as China is shut for Chinese New Year holidays.

After 50 minutes of trading, XJO is up +0.9%.  VIX is up modestly, so we might see the XJO settle back now.

Finspiration Australia.

Tue. p.m. 1/2/22.  Australian RBA holds rates steady, but pulls away the monetary stimulus.

That's called two-bob each-way, in the old race-track parlance.

XJO today:

 XJO had a moderate rise today of +0.49%.  XJO remains below many overhead resistance.

Today's announcement by the RBA brought a flurry of short-term upside moves in the XJO at 2.30 p.m., but that soon evaporated about 3.00 p.m.

At the close, XJO is back close to where it was at 2.30 p.m.

Forget about the RBA announcement, the big mover in our market today was the Miners.  Materials (XMJ) was down -1.21%.  That put a damper on our market today.

International effects are much more important to the Australian market than anything the Federal Government or the RBA can do.

Finspiration Australia.

 Tue. a.m. 1/2/22. U.S. markets up strongly.

Overnight.

Dow Jones +1.17%.  SP500 +1.89%.  Nasdaq +3.41%.  Small Caps +2.15%.  Banks +0.42%.

SP500.

The short-term trend is up.  Longer term trends remain bearish.  Wait.

Commodities.

Commodities Index +0.36%.  Energy +0.72%.  Base Metals -0.65%.  Gold +0.59%.

Iron Ore -4.2%.

Those Iron Ore and Base Metals prices will put our miners under stress today.

RBA meets today to decide interest rates.  No change is expected.

After 40 minutes of trading XJO is up +0.35%.

Finspiration Australia.

 Mon. p.m. 31/1/22.  XJO finishes down modestly.

XJO was down -0.24%.  All trends remain to the downside.  Look to sell rallies.

The following sectors were positive today:  Energy +1.35%, Consumer Discretionary +1.25%, Health +0.83%, Information Technology +3.69%, Communication Services +0.63%, Real Estate +1.35%.

The biggest sectors, however, were both down.  Materials -0.45%.  Financials -1.83%.

Until those two sectors start to fire, our market will be under stress.

Finspiration Australia. Weekly Wrap, week ended 28/1/22

 Is this as bad as it gets?

XJO Monthly Chart.

The monthly chart shows a sell signal for both the Supertrend (1.5/7) and the 8-Month EMA.

The monthly candle has bounced off major support - so it's possible the selling has ended, but unlikely.

Weekly Chart.

This week, XJO broke below the previous long-term support level which has held since September last year. It now becomes resistance.  Such a long-term support/resistance level has a lot of strength and will be difficult for the XJO to break above.  If it does - XJO is then back into its old long-term trading range - lots of sideways action can be expected if that happens.

So - XJO is now locked between two major support/resistance areas.  The most likely scenario will be for the XJO to test resistance at 7168 and then fall again.  XJO is currently at 6988.

Daily Chart.

XJO was down -2.62% this week.

Friday's action shows a bullish engulfing candle which is a strong short-term signal.

RSI(14) was at 23.6 on Thursday which is extremely over-sold, so a bounce to the upside was not unexpected.  Plus, major support had held on Thursday.  More short-term upside can be expected.

But serious resistance lies over-head:  Supertrend(1.5/7), 10-Day SMA and major horizontal resistance.

It will take a lot of "oomph" to get past those and back into the old trading range.  Not impossible - but difficult.

Sector changes this week.

All eleven sectors were down this week, with the best performer Consumer Staples (XSJ) only just on the negative side of the line.  XSJ down -0.04%. XSJ is a strong defensive sector.  Information Technology was again the worst performer, -4.6%, smashed by a fear of interest rate rises.  The Gold Industry Group XDJ, part of the XMJ sector, was down a massive -14%.

Seven sectors were down more than -2%.

New Highs - New Lows Cumulative.

NH-NL Cumulative has broken decisively below its 10-Day Moving Average.

This is different from events back in Nov/Dec when breaks were marginal and NH-NL Cum went going sideways rather than falling.

This decisive break is another "sell" signal confirm the "sell" signal from the Monthly Chart (above).

Strong-Weak Stocks has also crossed decisively below its moving average signal line, confirming the signal from NH-NL Cum.

Stats for S-W stocks this week were:  Strong Stocks 3, Weak Stocks 39.  Net S-W = 36.

Because of the nature of the criteria I use to determine Strong and Weak Stocks, it is almost impossible for Weak Stocks to number more than 50, so a number of 39 Weak Stocks is a powerful indicator of just how weak our market has become.

As bad as it gets?  Probably, for now.

Bonds versus Stocks.

On a relative basis Bonds are currently trouncing stocks as the above chart shows.  That doesn't mean you wouldn't lose money in Bonds - just, you would lose money a lot less slowly in bonds than in stocks.  

Another way of looking at it - an increase in allocations to bonds would slow the losses in your overall portfolio.

How bad is it?

A look at the number of stocks in the ASX100 above key moving averages provides an idea of how bad thins are.

ASX100 stocks above 10-Day MA:  6%.

ASX100 stocks above 50-Day MA:  20%.

ASX100 stocks above the 200-Day MA: 32%.

Short-term it couldn't get much worse.  But in the long-term it could still get worse, in a Bear Market we would expect ASX100 stocks above the 200-Day MA to fall below 20%.  We're not there yet - but maybe we're not in a Bear Market, yet.

Conclusion.

Expect a relief rally in the coming week.  But, we are no longer in a "buy-the-dip" scenario.  The odds have now switched to a "sell-the-rally" scenario.

Take care, and safe trading.

 

Finspiration Australia. Apple Inc. leads a big rise in Australian and U.S. stocks.

Apple reported after the U.S. market closed early Friday morning (Oz time), which produced a rise in U.S. Futures.  The Australian market, when it opened on Friday, drew encouragement from the U.S. Futures and finished well up at the close on Friday, XJO +2.19%.  Apple (+6.98%) and Visa (+10.6%) both rose strongly in Friday trading in the U.S. which lead to big jumps in the major U.S. indices, Dow Jones +1.65%, Nasdaq +3.13%.

Bonds in the U.S. were also supportive of stocks with the yield on 10-Year Treasuries falling -1.68% (prices for 10YT rising),

Yesterday in Australia.

XJO has bounced strongly off a major support level.  Yesterday's candle is a bullish engulfing candle - one of the stronger candle-stick signals.  We can expect more upside in the short-term (maybe not on Monday), but the medium-term is somewhat cloudy.  The 50-Day MA has turned down and the 200-Day MA has turned down.  The 50-Day MA is close to completing a "death cross" by falling below the 200-Day MA.  

XJO  is still a long way below the 200-Day MA and we can see a major resistance level at 7189.  XJO finished Friday at 6988.  Then we have the massive old trading range which will also provide resistance.

We'll have to wait and see how this bounce goes - and be ready to sell into any advance.

Overnight.

Dow Jones +1.65%.  SP500 +2.43%.  Nasdaq +3.13%.  Small Caps +1.55%.  Banks +1.03%.

SP500.

SP500 has bounced strongly off major support offered by the Sept/Oct low. 

Friday's action in the U.S. erased the past three days' losses in the SP500.  That takes the Index back up to resistance of the 200-Day MA and the Tenkan Sen (mid-point of the past nine days).  If that can be overcome, triple resistance lies ahead: major horizontal resistance, Kijun Sen (mid-point of the past 26 days) and the lower edge of the Ichimoku Cloud.  Tough stuff.

Commodities.

Commodities Index +0.09%.  Energy +0.36%.  Base Metals -0.9%.  Gold -0.3%.

Fear and Greed.

Despite the correction that has occurred in the SP500 (i.e., more than -10%), the Fear and Greed Index hasn't fallen into the Extreme Fear quadrant which usually precedes substantial rises in the major U.S. indices.  We might have to see Extreme Fear before we can presume we've seen "the" bottom in this market.

Finspiration Australia. Dow flat, Nasdaq down

Overnight:

Dow Jones -0.02%.  SP500 -0.54%.  Nasdaq -1.4%.  Small Caps -1.97%.  Banks -1.2%.

Indices were well up early in the day, faded in the middle session, and stayed low in the afternoon.

SP500.

SP500 continues to hold at major support, but below the 200-Day MA and Ichimoku Cloud.

RSI(14) remains extremely ovcr-sold with a reading of 24.3.  CCI is show a porisitve divergence from price, so a move to the upside seems likely.  Any significant bounce will probably be sold into.

Commodities.

Commodities Index +0.5%.  Energy +1.26%.  Base Metals +0.17%.  Gold -1.29%.

Iron Ore +0.5%.

XJO surged at the opening but has now fallen back a little to be up +0.7% after 30 minutes of trading.

Apple Inc. reported good results after the U.S. market closed and Dow Futures are up 200 points, so that probably explains the positive opening in Australia this morning.  After 40 minutes of trading, XJO is up only +0.2%.  This is looking like a repeat of yesterday.