Finspiration Australia. Chart Analysis of the Australian and International Stock Markets.

 11/5/22.  XJO up modestly today +0.19%.

 The Index saw plenty of intra-day buying today, after being well down at around 11.00 a.m.  From that low, the market put on about 70 points - a remarkable turnaround.

Horizontal support at 6980 has now held for two days in a row.

Today's action produced an "inside day".  That's still an indecisive action - but the hold at horizontal support suggests we will see more upside.

Best sector today was Health (XHJ +1.74%).  Financials (XXJ -1.06%) was the worst performer.  That was offset to some degree by a healthy rise in Materials (XMJ +0.9%).  Six sectors were up while five were down.  That's in line with the modest rise in the XJO.

Europe and the U.S. are currently showing positive signs of life, so we could be at the start of a counter-trend rally.  Just don't think this is the bottom.

Finspiration Australia. Chart Analysis of Australian and International Stock Markets.

 11/5/22.  Overnight.

Mixed results in New York.

Dow Jones -0.26%.  SP500 +0.25%.  Nasdaq +0.98%.  Small Caps -0.63%.  Banks -1.48%.

SP500.

SP500 was up modestly in choppy trade.  It is oversold on the RSI and a positive divergence is showing on the CCI.  We might get a short-term rally.  This is still a case of "sell-the-rally".

Commodities.

Commodities Index -0.59%.  Energy -1.34%.  Base Metals -0.64%.  Agriculture +0.7%.  Gold -0.84%.

Commodities Index is down to the 50-Day MA, so we might see a rebound here.

Iron Ore -1.3%.

XJO has opened flat this morning.  We'll probably have choppy trading today - following the U.S.

Finspiration Australia. Chart Analysis of the Australian and International Stock Markets.

 10/5/22.  XJO down -0.97%.

Today's fall is a sharp decline but ignores the intra-day activity.

XJO hit an important horizontal support level today and bounced up +1.6%.

That's a significant bounce off horizontal support.

We can expect more upside in the short-term.

That takes nothing away from my idea that we are in a bear market which will have further to fall.

We will get significant bounces but they should provide times when you can sell-the-rallies.

Finspiration Australia. Chart Analysis for Australian and International Markets.

 Possible Supports for this Bear Market, SP500.

Using principles developed by W.D. Gann, I've projected into the future possible support levels for a bear market in SP500.  First support level is at 3500, Second support level at 3055.  SP500 is at 3991, say 4000 in round numbers.

So, SP500 could fall another 500 points or 12.5% before we reach the first major level of support.

For the XJO:

XJO might fall about -15% from its current level to its first major support level at 6015. It is currently at 7120.

Finspiration Australia. Chart Analysis for Australian and International Markets.

 10/5/22.  Overnight.

Dow Jones -1.99%.  SP500 -3.2%.  Nasdaq -4.29%.  Small Caps +2.84%.  Banks -1.9%.

Indices down for the third day in a row - and new one-year lows.

The only bright sport (a very dim bright spot) in the American sectors was Consumer Staples which was flat, down just -0.04%.

It is difficult to imagine a more difficult environment for stocks than the current one:  war in Europe, slowing Chinese economy with covid lock-downs, possibility of recession in America, an aggressive Federal reserve and high inflation readings.

SP500.

Last might might have been a climax selling event with the Index down >3% and volume at its highest in at least the last 500 trading days.  That's about two years.  (I haven't looked back more than 500 days.) 

Positive divergences on CCI and Stochastic suggest the possibility of a bounce in the near future.

Commodities.

Commodities plunged last night along with stocks.  Commodities Index -4.52%.  Energy -5.57%.  Base Metals -2.96%.  Agriculture -2.34%.  Gold -1.45%.

Iron Ore -4.7%.

After 10 minutes of trading, XJO is down -1.55%.

Finspiration Australia. Chart Analysis of the Australian and International Stock markets.

 XJO down today -1.18%.

Short term indicators are all bearish.

XJO is so oversold, it could see a bounce to the upside.

The Index is now opposite a major congestion zone.  So we could see consolidation here or a move to the upside given the oversold nature of the market.  RSI14 is at 35 which is oversold.  Of course, it can go lower, but given the support at this level, the probabilities lie to the upside. 

A bounce in the U.S. tonight would be short-term bullish for our market.

Finspiration Australia. Chart analysis of the Australian and International Stock Market

  Weekly Wrap - Week ending 6 May, 2022.

XJO Monthly Chart.

The first week of May has been a poor result.  On the monthly chart, XJO is down -3.09% and, most importantly, has fallen below the 8-Month EMA.  Now, that only provides signals for long-term investors at the end of the month.  But this requires evaluation at the end of the month.

That may seem like a long time, but, for long-term investors it is sufficient to protect funds.

Hull MA13 remains bullish.  Supertrend (1.5/7) remains bearish where it has been since the beginning of January.

Weekly Chart.

XJO was negative this week, -3.09%, the third week down in a row.  

This chart is bearish.  This week's candle has switched Hull MA13 to blue (bearish); Supertrend (1.5/7) is blue (bearish) and the chart is below the 8-Week EMA which has turned down (bearish).  RSI and CCI are below their mid-lines (bearish) and Stochastic has fallen below its signal line (bearish).

That's a dreary outlook.

The chart shows a trading range in round figures from 7630 to 7170.  This week XJO finished at 7206.  So we could be looking at a bounce in the near term.  Next level of support is at 6980.  That seems a likely target for this medium-term movement.

Daily Chart.

Friday was a serious down day for the XJO -2.16% .

Of interest on this chart are the Positive Divergences on CCI and Stochastic.

They are arriving as the chart approaches horizontal support 7170.  In fact, Friday's candle had a small bounce off that level on Friday.  So we may see consolidation and a counter-trend rally in the next few days.

Sector Changes - past week.

This chart shows the performance of each sector (plus Gold Miners, XJO, BEAR and IAF) over the past week.  XJO was down -3.09%.  

All eleven sectors were down, although two were down only marginally:  XUJ -0.3% and XEJ -0.07%.

XPJ (Property) was hard hit, -8.18%.  (That's not the same as Housing, although it does include two big developers of Housing:  Stock Land -6.25% and Mirvac -6.61%.)  Goodman, an international property, management and development company with properties around the world, fell the most -14.1%.  It has formed a large head-and-shoulders chart formation which suggests more downside.

Serious falls also occurred in the following sectors:  Information Technology -5.99%, Telecommunication Services -4.67% and Consumer Discretionary -3.91%

New Highs - New Lows Cumulative.

NH-NL Cumulative continues to fall and is now falling steeply under its 10-Day Moving Average, that's a big red danger sign for long-term investors.  

Below is a chart of % NH/NH+NL:

10-DMA of %NH/HN+NL is now the lowest it has been in the past 18 months.  As a contrarian indicator, that suggests we are near a low.

% of Stocks above key moving averages.

1.  % of stocks above 10-Day Moving Average, 15%.

2.  % of stocks above 50-Day Moving Average, 48%.

3.  % of stocks above 200-Day Moving Average, 43%.

All three are above 50% level - which confirms the bearish status of the ASX

Back in late January, we had two weeks in a row where % of Stocks above 10-DMA fell below 15%.

That suggests, perhaps, another week of falls before a strong rebound

Offence or Defence?

The above chart compares the performance of XSJ Consumer Staples (yellow and blue candles) with XDJ Consumer Discretionary (blue and grey candles).  

If consumers are confident about the economy, they are usually happy to splurge on big ticket, discretionary items - companies such as Harvey Norman, JB Hi-Fi and car retailers.  If consumers are not so confident about the economy, consumers tend to delay buying big ticket items.  

Consumer Staples are much more resilient to lack of confidence in the economy.  While they may delay purchasing a new refrigerator or Apple computer, consumers will still buy toilet paper and breakfast cereal.  In Australia, big retailers like Woolworths and Coles dominate the Consumer Staples market.

We can see in the above graph, that XDJ and XSJ were more or less in sync from May 2021 until February this year, when XSJ chart began to dominate the XDJ chart.  

That suggests that investors need to take on a more defensive posture than they had last year.

Conclusion.

1.  The monthly, weekly and daily charts are more or less in sync - bearish.  

2.  XSJ/XDJ suggests a defensive posture in investments.

3.  Contrarian indicators and support levels suggest the Australian market is at or close to a "bounce" level.  That will probably be a case of sell-the-rally.

Stay defensive until the market conditions improve.