24/5/23. Australian Market falls heavily today.

 XJO Down -0.65%.

XJO has support of the Supertrend just below it.  Then it will hit the 200-MMA where it's been a couple of times recently.

U>S. Futures are down, SP500 futures down -0.99%.  

EuroSTOXX600 currently down -1.6%.

It's not looking too hopeful for tonight or tomorrow.

24/5/23. U.S. markets very weak.

 

Dow Jones -0.69%.  SP500 -1.12%.  Nasdaq -1.26%.  Mid Caps -0.99%.  Small Caps -0.11%.  Banks +0.65%.

SP500.

SP500 has broken below the lower support line of the up-sloping bearish wedge.

Just below is a bunch of indicators - 20-Day MA, Supertrend and Kijun Sen (Ichimoku Base Line).  A break down through those will probably see more falls - looking to the 200 Day MA.

Commodities.

Commodities Index +0.4%.  Energy +0.77%.  Base Metals continue to slide -1.87%.  Agriculture -0.1%.  Gold flat +0.12%.

In New York, BHP was down -1.5%.  Rio down -1.76%.  Woodside flat -0.09%.

ASX Futures down -35 Points - about -0.5%.

23/5.23. ASX finishes Flat.

XJO Chart.

 XJO down marginally today -0.05%,

The Index is above the 200-Day MA and the Supertrend (7/1.5) but sitting right on the 20-Day MA (mid-point of the Bollinger Bands) and the Kijun Sen (mid-point of the past 26Days).  So this could go either way.  If it falls, there is plenty of near-by support.

Wait.

Finspiration Australia.

 23/5/23.  Tuesday Morning Finspiration Report

Overnight.  Mixed results in the U.S., Down Down, Nasdaq Up.

Dow Jones -0.42%.  SP500 +0.02%.  Nasdaq +0.5%.  Mid Caps +0.52%.  Small Caps +0.74%.  Banks +1.75%.

SP500.

 All indicators on this chart remain bullish - but the upsloping wedge suggests a move to the downside.

Ambiguous.

Commodities.

Commodities Index flat +0.09%.  Energy flat -0.05%.  Base Metals down -1.3%.  Agriculture flat -0.1%. Gold down a little -0.23%.

After 20 minutes of trading this morning, XJO is up +0.3%.  Energy is leading the way, up +1.2%.

XJO remains in its sideways consolidation.

Finspiration Australia.

22/5/23.  XJO finished down a little today.

 

XJO down -0.22%.  It is still basically in a sideways consolidation pattern.  It needs to finish above the Supertrend Line (that's the blue line just above the chart heading sideways).

Dow Futures are currently flat - 0.0%.

It seems that not much will happen until the Debt ceiling discussions are finalised.

Finspiration Australia

 

 Sunday, 21 May, Weekly Report. Australian Market.

The week started poorly but the past couple of days saw an improvement as a "miracle" in the American debt ceiling talks seemed probable.

XJO Daily.

XJO finished up a moderate +0.31% for the week but remains in a sideways consolidation movement.

Weekly Performance of Sectors (plus Gold Miners, XJO and Bonds)

Five sectors up, five sectors down and one flat.  Information Technology +5.19% continued its good work from the previous week when it was up +1.97%.  XEJ, which can be quite volatile, was up +1.6% after being flat the previous week. 

The main defensive sectors suffered again this week.  XHJ down -0.69%, XSJ -1.08%, Utilities -0.22%.  Investors seem to be positioned for a risk-on market with a move out of defensives. 

Morningstar classifies the sectors into three groups, 

• Cyclicals - XMJ, XDJ, XXJ, XPJ.  These have strong correlations to the business cycle.  
• Sensitive - XTJ, XEJ, XNJ, XIJ.  These have moderate correlations to the business cycle.
• Defensives - XHJ, XUJ, XSJ.  These tend to have low correlations to the business cycle.

The "Sensitive" group did well this week with three sectors up and one flat.  XIJ was the best performing sector, followed by XEJ, while XTJ was the fourth best performer.  So three out of the four best performers this week came from the Sensitive group  

Momentum

The following data is a medium term measure of momentum obtained by subtracting Weekly RSI from Daily RSI.

The only sectors with positive upside momentum are Property (XPJ), Energy (XEJ), Telecomms (XTJ) and Information Technology (XIJ). 

XIJ has continued its dominance this week.  The sector is getting a little long in the tooth - if you hold strong stocks in that sector -  good for you.  It's probably too late now for non-holders to go chasing those stocks (e.g. XRO, WTC).

Besides XIJ, the big improvers this week were Energy (XEJ) and Financials (XXJ).  Strong stocks in those sectors might be worth a look in the next week. 

SP500 Daily Chart.

SP500 had a strong week this week with hopes that a solution to the Debt Ceiling impasse was probable.  SP500 was up +1.65% this week with most of that coming on Wednesday and Thursday (NY time).

The Index is in an Upsloping Bearish Wedge.  In my experience, these have a high probability of breaking to the down-side.

Yesterday, in my Saturday blog, I mentioned that the current up-trend could be a "sucker rally" hasNYSE and Nasdaq breadth hasn't improved in the same way as the Index.

That adds to the probability that the upscoping wedge will break to the down-side.

Take care.  If a debt ceiling agreement is reached - it might be a case of "sell the fact".

Stocks/Bonda Ratio.

The Stocks/Bonds Ratio Chart has climbed above the zero line so Stocks are currently out-performing Bonds - risk-on.  But,  it is usually best to wait until the 5-Day MA breaks above the 21-Day MA before feeling comfortable about a medium term rally in stocks. 

Conclusion.

XJO remains in a sideways consolidation.  Investors appear to be positioning for a risk-on market, with cycling out of Defensives Sectors and into Sensitive Sectors, and, to a lesser extent, into Cyclical Sectors.

SP500 may be setting up for a move to the downside after a strong week after improving Debt Ceiling talks.  If SP500 does drop, we will probably follow and could break to the downside of the current consolidation.

Stay safe.

Finspiration Australia.

 20/5/23.  Saturday Morning Finspiration Report.

In Australia yesterday.

XJO up yesterday +0.59%.  The daily candle finished at horizontal resistance from 8 May.

Yesterday's candle finished marginally above the Base Line of the Ichimoku System.  (Base Line, black, is the mid-point of the last 26-periods.).

The Conversion Line remains below the Base Line.  (Conversion Line, blue, is the mid-point of the last nine periods.). We need to see the Conversion Line above the Base Line for a bullish context.

Overnight in America.

Dow Jones -0.33%.  SP500 -0.14%.  Nasdaq -0.24%.  Mid Caps -0.89%.  Small Caps -0.74%.  Regional Banks -1.76%.

Regional Banks came into focus again last night after U.S. Treasury Secretary, Janet Yellen, said more mergers might be necessary.

SP500.

SP500 is at the top edge of an upscoping bearish wedge.  Watch for a fall back to the lower edge of the wedge.  A break lower would be bearish.

Sucker Rally?

To check if the current upside move is a "sucker rally" I'm looking at the NYSE Advance-Decline Line.

Comparing the NYAD Line with the SP500 we can see that NYAD is showing a negative divergence from the SP500 - so - yes, this probably is a sucker rally.

Here's the chart for QQQ (ETF for Nasdaq).

Since early May, QQQ (Nasdaq) has been in a very strong up-trend.

Here's the Advance-Decline Line for Nasdaq:

NAAD is in a negative diversion from Nasdaq and at the lower end of its daily chart.  That's in marked contrast to Nasdaq which is now way up at the top of its chart - and overbought.

The only conclusion that can be drawn is that the market has been dragged up by a few large tech stocks.  That's a precarious position to be in for the market.

Gold.

Gold came roaring back to life last night, up +0.99% after being in a short-term down-trend since 10 May.  It still has work to do to prove its bullish credentials, but it does look promising.