Finspiration Australia. Weekly Wrap, week ended 25/2/22

     XJO was down this week.  Worst performance since October, 2021.

XJO Monthly Chart.

XJO has been in a down-trend since September, 2021.  

In January, the monthly chart gave a long-term sell signal for both the Supertrend (1.5/7) and the 8-Month EMA.

At the end of February (one day to go), the February XJO candle remained below the 8-Month EMA and below the Supertrend.   

I'd like to see the Hull Moving Average turn positive (blue dashes change to yellow dashes) before taking buy action.  For long-term investors - stay defensive.

Weekly Chart.

XJO was down this week, -3.1%.   It remains below the 8-Week EMA, the 50-Week MA and Supertrend (1.5,7).  The Hull Moving Average remains negative (blue dashes).  

Trends are down on all time-frames.  Stay defensive.

Daily Chart.

XJO on Thursday broke down from its consolidation zone.  That took it down to a minor Support/Resistance Zone.  Tuesday saw an early warning of further downside when the Supertrend switched from yellow to blue (bearish).

Friday's action in the U.S. suggests we'll see a big upside move on Monday which should result in a test of the recent large consolidation zone.

That will look promising for the market, but the XJO still has very strong resistance levels above the current level.  Stay defensive.

Sector changes this week.

Only three sectors were up this week.  Two of those were defensives.  Best was Consumer Staples (XSJ) +3.39%.  Utilies (XUJ) up +1.67%.  Energy (XEJ) +0.72% benefitted from supply disruptions due to the Ukraine/Russia crisis.  XGD (Gold Miners) which is an industry sub-group within Materials (XMJ) performed positively, up 1%.

The worst three performers were Consumer Discretionary (XDJ) -6.09%, Materials (XMJ) -4.59%, and Financials (XXJ) -4.31%.  XMJ and XXJ are the two biggest sectors of the market making up about 40% of the ASX, so it's no wonder the XJO was down heavily.

CIMIC which has been in a steep down-trend received a take-over offer which sent its price up >33%.  Nice for those long-suffering investors who held on to Cimic.

New Highs - New Lows Cumulative.

NH-NL Cumulative this week fell clearly below its 10-Day Moving Average.  Until we see a decisive move back above the 10-Day MA, it is best to stay defensive.  This is a good indicator for long-term investors.

Weakness in the NH-NL Cum is confirmed by my weekly Strong-Weak Stocks Cumulative chart.

S-W Cum tends to act a little earlier than NH-NL Cum, but NH-NL Cum has an advantage in being compiled on daily data rather than weekly data.

Bonds versus Stocks.

The Stocks/Bonds Ratio chart shows a small advantage of stocks over bonds this week.  Remember this is a relativity indicator - it doesn't mean that stocks did well - just better than bonds.  But there's not much in it.  The chart finished above zero (stocks doing better than bonds), but below its 10-Day MA, so any advantage for stocks is disappearing

Stocks above key moving averages - last week and this week.

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:  Last week 43%.  This week 38%.

ASX100 stocks above 50-Day MA: Last week 39%.  This week 32%.

ASX100 stocks above the 200-Day MA: Last week 52%.  This week 28%.

Until we see all of these above 50%, it's best to assume we are in bearish conditions.

Conclusion.

Stock markets are faced with several head-winds.  Inflation is on the lips of most analysts.  With Inflation at multi-year highs, it seems inevitable that Central Banks will be raising interest rates.  That's a negative for growth stocks in particular which tend to be highly leveraged.  The market is also faced with the uncertainty of the Ukraine/Russia situation which may be reaching a conclusion, with Russian forces encircling Kyiv.

I'm inclined to remain defensive, having reduced holdings in bonds and stocks this past week.  

Good luck and good investing.

Finspiration Australia. U.S. up strongly for second day.

 Yesterday in Australia.

XJO finished up just +0.1% yesterday.  It now needs to play catch-up after the SP500 was up >2% last night.  That suggests we could see an opening up on Monday of ~2%.  Events in Ukraine will still dominate the news, but the market now seems to be shrugging off the negativity present in the media. 

Overnight.

Dow Jones +2.51%.  SP500 +2.24%.  Nasdaq +1.64%.  Small Caps +2.23%.  Banks +4%.

SP500    

Positive divergence on the CCI has once again pointed to a reversal to the upside in the SP500.

Conditions overall remain bearish.  I'll consider this to be a counter-trend rally while bearish conditions remain.  But - enjoy the upside move while it happens.

Next Federal Reserve meeting is 15-16 March.  A little over two weeks away.  That could be the next big test for markets.

Commodities.

Commodities Index -1.51%.  Energy -1.21%.  Base Metals +0.04%.  Gold -0.33%.

VIX.

VIX (aka Fear Index) has fallen the past two days but remains elevated at 27.59.  It needs to fall below 20 to indicate a return to bullish conditions.

Finspiration Australia. Snap-back rally in the U.S.

 Overnight.

Dow Jones +0.28%.  SP500 +1.5%.  Nasdaq +3.34%.  Small Caps +1.72%. Banks -2.12%.

Nasdaq performed an extra-ordinary feat last night, down about -3% at the opening it finished up >3%.

SP500.

SP500 staged a great rebound last night but remains below major resistance at 4300 (round figures).

The may well be the start of a counter-trend rally, but overall bearish conditions remain.  I'll assume this is nothing more than a counter-trend rally until we see bullish conditions prevail.

Commodities.

Commodities saw a big upside opening bid but sold off during the session.  Commodities Index +0.42%.  Energy +0.29%.  Base Metals +1.81%.  Gold -0.65%.

Iron Ore -0.8%.

We should be positive today but I'm not expecting anything of the magnitude of the Nasdaq.

Finspiration Australia. ASX tumbles.

XJO fell heavily today -2.99%.  

 

At this stage, we just have to hold on and see where this ends.  XJO seems destined to reach the January low.

Today's result was magnified by ex-dividend stocks today.  BHP, the biggest stock in the ASX, fell -6.9% and WPL down -2.7%.  That was actually less than the general market fall, so a good result on the day for WPL.

Travel related stocks performed poorly today after issuing their reports.  Qantas down -5% and Flight Centre down -10.1%.  

Cimic was the surprise result after a take-over offer was announced.  Cimic up +33.4%.

European markets are all well down at this stage.  So there's not a lot of hope yet for a rebound.

Finspiration Australia. U.S. markets continue to slide.

 Overnight.

Dow Jones +1.38%.  SP500 -1.84%.  Nasdaq -2.57%.  Small Caps -1.46%.  Banks -2,52%.

SP500.

SP500 remains bearish on all time frames.

It is now down to the major support level of the January lows.  This becomes a crucial test for the SP500.

Commodities.

Commodities Index +0.94%.  Energy +1.48%.  Base Metals -0.79%.  Gold +0.45%.

Iron Ore +1%.

After 35 minutes of trading, XJO is down 140 points or -1.9%.

BHP went ex-dividend today.  It is the largest stock in the ASX, so that has exaggerated the fall in the XJO today.

Finspiration Australia. XJO rose today.

XJO up today +0.62%

This chart is about as ambiguous as it can be.

The current consolidation is sitting about mid-range of the recent downside movement.

It bounced today off a major horizontal support level.

It remains below the 50 and 200 Day MAs which are in close proximity.

It remains below the Supertrend 1.5,7.

This can go either way.  A break above the 50 & 200 Day MAs should see a solid move to the upside.

The ASX remains in the midst of reporting season.  Reports from major stocks were mixed today.

WOW up +1.4% after reporting an 8% increase in revenue.

Domino's Pizza slumped -14%.

WiseTech Global was up +4.3%.

Overseas markets are generally positive, shrugging off the Ukraine/Russia problem.

Germany currently up more than +1%.

U.K. currently up about +0.6%.

 

Finspiration Australia. Dow Jones falls to a four-week low.

 Overnight.

Dow Jones -1.42%.  SP500 -1.01%.  Nasdaq -1.23%.  Small Caps -1.45%.  Banks -0.14%.

SP500.

Conditions remain bearish on all time frames for the SP500.  

The index is approaching the January lows, we may get some indication around that zone if we are going to get a counter-trend rally.

Commodities.

Commodities Index +1.42%.  Energy +0.95%.  Base Metals +0.42%.  Gold +0.21%.

Energy seems close to exhaustion after gapping up at the opening then selling off intra-day.

Iron Ore -1.6%.

The Australian market opened flat this morning, then oscillated around the zero mark.  In the last few minutes (11.00 a.m. Summer time) it shot up to be up +0.24%.  That's looking promising for further rises.