Weekly Wrap - Week ending 27 May, 2022.
XJO Monthly Chart.
The monthly chart is range bound 6970-7630.
The chart is currently above the 8-month EMA but it is essentially sideways as indicated by the two flat Supertrend lines, one above and one below the monthly candles.
The MACD Histogram also indicates a flat or sideways market, with the Histograms almost non-existent for the past three months - hugging the zero line.
Weekly Chart.
XJO was positive this week, +0.52%, after being up +1% the previous week
The chart is range bound, in concert with the monthly chart.
Medium term, the chart the chart remains bearish.. Hull MA13 is blue (bearish); two Supertrend lines are blue (bearish) and the chart is below the 8-Week EMA is heading down (bearish). RSI and CCI are below their mid-lines (bearish) and Stochastic has fallen below its signal line (bearish).
The chart is, however, rising from the lower edge of the range
The chart shows a trading range in round figures from 7630 to 6930. This week XJO finished at 7182.
Daily Chart.
Looking at this chart, it doesn't take a genius to see that the past week or so has been in a sideways trend.
All three charts, monthly, weekly and daily are in sync, sideways within sideways. Let's see of the daily chart can break out of its short-term range.
The confluence of the 50/200 DMAs suggests that any rise is likely to be short-lived.
Sector Changes - past week.
This chart shows the performance of each sector (plus Gold Miners, XJO, BEAR and IAF) over the past week.
Despite the positive rise this past week, the Market is unbalanced, with four sectors up, one flat and six down. Resources (Materials XMJ +1.78. Energy XEJ +2.14%) and Financials (XXJ +1.31%) were largely responsible for the positive ASX return this week. XMJ and XXJ are, of course, the two biggest sectors in the market, and have an outsized impact on where the market heads.
Information Technology (XIJ -3.43%) and Consumer Staples (XSJ -2.2%) were the worst performing sectors. They represent two edges of the equity spectrum (from growth to defensive) so the market was a bit indecisive from that point of view. Commodity based sectors (Materials and Energy) remain the places to be.
New Highs - New Lows Cumulative.
This is one of the important breadth indicators. Unless breadth is solidly positive, the market is always under threat.
NH-NL Cumulative continues to fall and is now well under its 10-Day Moving Average, that's a big red danger sign for long-term investors.
ASX Advance-Decline Line.
This is another important indicator of breadth.
Like NH-NL Cum, ASX Advance-Decline Line is also bearish, but not quite as bleak as NH-NL Cum.
It is, however, below its 10-DMA and its 20-DMA.
% of Stocks above key moving averages.
1. % of stocks above 10-Day Moving Average: Last Week 74%, This Week 52%.
2. % of stocks above 50-Day Moving Average, Last Week 38%, This Week 30%.
3. % of stocks above 200-Day Moving Average, Last Week 40%, This Week 37%
This is another indicator of weak breadth. Despite the rise in the XJO the %age of stocks above key Moving Averages fell this week.
Weak breadth is often a leading indicator for falls in the market.
Conclusion.
1. Monthly, Weekly and Daily charts in sync - non-trending. (Traders will play the ranges)
2.. Breadth is poor, so the most likely direction is down. If breadth continues to be poor, we can expect a break down from the ranges, and a continuation of the bear market. Perhaps not this week, but its not far off.
3. 50/200 DMAs are almost connected - that's stiff resistance. Any rise is likely to be short-term when the XJO hits dual resistance of those two major MAs.
