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

         Weekly Wrap - Week ending 30 September, 2022.  

XJO Monthly Chart.

We are now at the end of the month.  September is historically a poor month in the market, and this September hasn't deviated from the trend.  XJO down in September, 512.6 points, or  -7.34%.  

The chart has broken marginally below the 50-Month Moving Average which gave support in June/July. It has finished, however, above the intra-month low of June.

The chart is bearish.  On the basis of this chart, longterm investors should stay on the sidelines.  

 Both Supertrend Lines remain blue (bearish).  The chart remains below the 8-Month EMA which is heading downward, i.e. bearish.  Hull MA13 is headed down - bearish.  Hull MA13 is the most sensitive of these.  It turned down first in Oct. 2021.  We'll be looking for a turn up in Oct. 2022 - a one-year anniversary.  Mid-October is often a turning point in down trends.

Weekly Chart.

XJO was down this week -1.53%, continuing the plunge from the two previous weeks.  The chart remains bearish.  The chart closed just below the 200-Week MA where it found support in late June.

XJO found resistance at the 50-Week MA.  Those two MAs 50-Week and 200-Week appear to be important dynamic support/resistance areas.  Further down side could see the market test the low of March, 2020.  

Two Supertrend lines are blue - bearish.  Hull MA13 is headed down - bearish.

The Weekly Chart is in sync with the Monthly Chart - both Bearish.

Daily Chart.

XJO remains in a bearish down trend.  Daily, weekly and monthly are in sync - bearish.

Looking at the tea-leaves provides some hope of a rebound.  The XJO is oversold with an RSI at 34.58.  Stochastic is in its oversold zone.  

XJO has found support at the oblique supporting trend line.  I had a turn date using WD Gann methods for the 26 Sept.  In the short-term that stopped the down-trend, but reversion to the upside hasn't occurred.  

The chart remains bearish and XJO on all three time frames (monthly, weekly, daily) remain in sync.  Bearish.  Any upside is likely to be sold into until we see more optimism in the longer time-frames.   

SP500 Daily.

RSI is very oversold at 35.3.  Stochastic is in its oversold zone.

At this stage, a move to the upside is speculative - but it should not be discounted.

Sector Strengths by RSI.

RSI (Relative Strength Index) is calculated using the default setting of 14 days - almost three weeks of trading.  It provides a more reliable guide to changes in sectors than the one-week results which can jerk around quite a lot and, thus, RSI is probably a more reliable guide to recent strength in the sectors. (Click here for a description of RSI.)

Eleven of eleven sectors have readings below 50.  50 is often regarded as  dividing line between bullish and bearish. With all sectors below 50, we have a very bearish market with weak breadth.

The best two sectors are the resources, XEJ and XMJ.

This week we again have four sectors below 30 - XTJ, XHJ, XUJ and XPJ.  XSJ and XDJ (the big retailers) are just above the 30 level.  

This is an exceptionally weak market with poor breadth.

Breadth:

    1. New Highs - New Lows Cumulative.

This week saw NH-NL very bearish, four out of five days saw NH-NL greater than -100.  The last time we saw a series like this was back in March, 2020, during the bear market of 2020.  Readings back then were more extreme than the current ones, so we could have some more extreme readings coming in the near future.

This indicator trends strongly.  Only when we see a clear break to the upside, preferably with the 10-DMA above the 20-DMA, should long-term investors be willing to invest new funds.

    2.  Strong Stocks - Weak Stocks Cumulative.

This is a metric of my own making.  All stocks on the ASX100 are rated on seven criteria.  Stocks positive on all seven criteria are rated "Strong".  All stocks negative on all seven criteria are rated "Weak".

This indicator trends strongly.  Only when we see a clear break to the upside, should long-term investors be willing to invest new funds.

This chart remains below its Five-Week MA, which is a bearish reading.  This is a reasonable guide for medium term traders.

% of Stocks above key moving averages.

1.  % of stocks above 10-Day Moving Average: Last Week 5%, This Week 13%.  Any reading under 20 is very weak.

2.  % of stocks above 50-Day Moving Average, Last Week 11%, This Week 12%.  

3.  % of stocks above 200-Day Moving Average, Last Week 19%, This Week 16%.  That's the worst reading since May, 2020.

Momentum is now nearly as bad as we saw at the end of the 2020 bear market.  We can't be far off  an end to this down trend.  At worst, one more month of bearish sentiment should see a turn-around.  The bear market of 2020 saw multiple readings below 10 - we might have to see similar readings this time.

SENTIMENT.

1.  CNN Fear and Greed Barometer.

F&G Index is showing Extreme Fear - it is lower than a week ago.  It can go lower.  An "extreme fear" reading registers with contrarians that a rebound is likely.

Conclusion.

Markets are very weak.  They may have further to go.  But don't discount a move to the upside. It is not far off.

Stay safe.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets. +BITCOIN.

 24/9/22.  Overnight in America.  Stocks fall again.  "How low can you go?"

Dow Jones -1.62%.  SP500 -1.72%.  Nasdaq -1.8%.  Small Caps -2.23%.  Banks -1.97%.

SP500.

SP500 is now extremely oversold with an RSI at 28.9.  Rarely does a major index show such a low reading without bouncing to the upside.  Of course, oversold can always go more oversold, so don't jump the gun.  A more by Stochastic back above the oversold zone (below 20) would be a "get set" signal.

The risk to the upside is now much better than the risk to the downside.  Traders will do well here.

Any move to the upside will likely be sold into.

Below is a six-month chart for SP500:

I've added this chart because we can see that SP500 is now down, more or less, to the June low.  That's an important support level.  Give the extremely oversold nature of SP500, that reinforces the idea that the Index is poised for a move to the upside.

Commodities.

Commodities had huge falls last night.  Commodities Index -3.39%.  Energy -4.09%.  Base Metals -2.58%.  Agriculture -1.94%.  Gold -1.73%.

Commodities are generally very oversold with RSIs down in the low 30s.  Look for a rebound in the next few days.

Yesterday in Australia.

XJO fell heavily on Friday -1.87%.  RSI is at 34.58, so not as oversold as SP500, but that could change on Monday.

The Index is opposite a congestion zone from July which might offer support.  If America does revert to the upside, we should follow suit.

Bitcoin.

In week-end trading, Bitcoin is up +1.73%,  but the chart remains in bearish territory.

Positive divergences on indicators suggest that Bitcoin could stage a counter-trend rally.  Nimble traders could benefit from such a move.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets + BITCOIN

 23/9/22.  Overnight in America, stocks ease down again after FOMC.

Dow Jones -0.36%.  SP500 -0.84%.  Nasdaq -1.37%.  Small Caps -2.1%.  Banks -2.48%.

10-Yr Treasuries rose to an 11-year high of 3.71%.

SP500.

SP500 remains in its down-trend.  

RSI is very oversold at 32.06, which raises the possibility of a trend reversal.  First sign would be a move by Stochastic out of its oversold zone, going above 20.  The market can remain oversold for much longer than expected, so don't jump the gun.

Using WD Gann principles, I have a turn date of 26/9/22 which is Monday.  Don't expect precision with these calculations, but they're usually not far out - so expect a reversal to the upside in the next few days.

Commodities.

Commodities Index suffered intra-day selling but managed a rise of +0.28%.  Energy flat +0.04%.  Base Metals +0.59%.  Agriculture flat +0.05%.  Gold flat -0.06%.

Iron Ore managed a small rise, +0.2%.  

To start the day, ASX is down heavily.  XJO -1.2%.

BITCOIN.

Bitcoin is currently up about +0.6% but remains bearish.

Indicators are showing positive divergences, so the chance of a counter-trend rally remains possible.

Traders could make good money here, but don't expect any rally to last for too long.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets + BITCOIN.

 22/9/22.  Overnight in America, Fed announces interest rate rise, stocks fall.

Dow Jones -1.7%.  SP500 -1.71%.  Nasdaq -1.79%.  Small Caps -1.14%.  Banks -2.12%.

As expected, the Fed raised its key interest rate by 75 basis points, i.e, three-quarters of a percent.  The mood of the market changed as Fed Head Powell spoke about the meeting's deliberations.  Forty minutes after the IR announcement, SP500 was in positive territory, but a sharp slide in the last hour of trading saw the Index fall sharply.

SP500.

SP500 is now down to the lower end of the congestion zone seen at the left-hand side of the chart.

RSI is oversold at 33.74 and Stochastic remains in its oversold zone.

Watch for a trend reversal.  First sign would be a rise by Stochastic out of its oversold zone.

Commodities.

Commodities Index -0.6%.  Energy -0.46%.  Base Metals -1.4%.  Agriculture -0.57%.  Gold +0.46%.

The Australian market is closed today for the National Day of Mourning.

IG runs a synthetic market for Australia in lieu of the ASX - it is currently down -1.13%.

BITCOIN.

Bitcoin is currently down -2.6%, which is a new low.

That no doubt is a reaction to the Fed's interest rate rise.  Since Bitcoin provides no direct revenue it's not surprising that traders/investors are switching out of Bitcoin into other more enticing assets - e.g, cash which can earn interest.

That fall also puts a big question mark over my idea that this consolidation represented accumulation rather than distribution.

The crypto remains oversold so I'm not ruling out a counter-trend rally.  A return to a bull market?  That is looking less and less likely with more interest rates on the way.

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

 21/9/22.  XJO down heavily today.

XJO down today -1.56%.

Well, that wasn't very nice.  Yesterday the market gave us a short-term bullish signal, and today it took that off the table with a bearish engulfing candle.

hmm.  Looks to me like our masters are putting the bejesus up us.

Down today, up tomorrow?

Who knows?

The XJO remains primed for a move to the upside with Stochastic down in the oversold zone.

Some indicators have positive divergences.  Just look at CCI.

We have the Federal Reserve announcement on interest rates - about 2.30 a.m. Oz time.

I'm expecting that to result in a move to the upside as the current probable interest rate rise is already built into prices.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets + BITCOIN

21/9/22.  Overnight in America, stocks slip ahead of Fed announcement.

 Dow Jones -1.01%.  SP500 -1.13%.  Nasdaq -0.95%.  Small Caps -1.24%.  Banks -1.5%.

European stocks were down for the sixth day straight.  STOXX 600 -1.1%.

SP500.

 

SP500 remains bearish but consolidating at its lows.  It is poised for an upside move with the Stochastic down in the oversold zone.  

The expected interest rate rise which will be announced tonight (Oz time) has likely been priced into the market.  The last three rises saw the SP500 go to the upside after the announcement, so there seems no reason to believe that the same will happen tonight.

Commodities.

Commodities Index -0.12%.  Energy -0.96%.  Base Metals -0.37%.  Agriculture +1.32%.  Gold -0.57%.

After 5 minutes of trading, XJO has followed the U.S. to the down side.  XJO -0.6%.  It will probably see some more downside before we get a bounce.

BITCOIN.

Bitcoin has continued to slide on a closing basis but remains above Monday's low.

It is difficult to see a non-revenue producing asset like Bitcoin to turn bullish in an era of rising interest rates, but the "whales" that control the Bitcoin price may have other ideas.

The current long-term consolidation in Bitcoin still looks to me like Accumulation rather than Distribution, but we have to see BTC get above the mid-August high to feel sure about that idea.

Finspiration Australia. Chart Analysis for Australian and International Stock Markets + BITCOIN.

 20/9/22.  ASX up strongly today.

XJO up today +1.29%.  That comes off horizontal resistance, so we could have a few more days on the upside.

There's a little bit of optimism in the air ahead of the Federal Reserve announcement.  The Fed has a two-day meeting starting tonight (Oz time), so we have to wait another day for their decision.

Nine sectors were up today, and 71% of stocks in the XJO finished in positive territory.  That's a good result for the day.

The best sector today was Materials (XMJ) up +2.7%.  Next best was Energy (XEJ) +2%.  So resources were the backbone of the market today.

Financials (XJJ) lined up with the market +1.3%.

We probably won't see a lot of movement now until the Fed announces its interest rate decision.