26/6/23. Monday Evening Finspiration Report.

 It was a wonderful day in Brisbane today - if this bewinter, let's have dollops of it.

I wish I could say the same for the stock market today.  Yep - another great day for the beach, down at Burleigh Heads - or even Surfers (if you want to slum it).

But, it was another horrible day on the ASX - for the fourth day in a row.  XJO down -0.29%.  Well - I suppose that's not too bad considering what it has been like the previous two days.

Some intra-day buying did occur today - that's something.  Watch for carry through buying tomorrow.  A positive day tomorrow might signal the end of this pull-back.  Just don't hold your breath waiting for it.

25/6/23. Weekly Finspiration Report.

  

That's been the story of the past two weeks.  XJO had a stunning rally to break upwards from its down-trend channel - only to fall back down an even more spectacular manner.  Crazy stuff.

XJO Daily Chart.

XJO down this week,  -2.1% after being up +1.81% the previous week.  The Index has broken out of its down-trend channel.

XJO is now back inside the down-trend channel and at horizontal support.  

American SP500.

This is what I said last week:  SP500 is in a strong up trend beginning in mid-March.  It is now at the top edge of the Standard Error Channel.  Expect a pull-back.

And on cue, the SP500 pulled back.  It is now close to three important supports:  the lower edge of the SEC, horizontal support, and the 200Day MA.  Those three in close proximity provide a powerful argument for a move back to the upside in the coming week.  That should save Australian stocks from further catastrophic falls.

Sector Performance this past week.

The only sectors up this week were the three Defensives, Utilities +1.47%, Staples _2.07%, Health +0.29%.  The rest of the market was dire.  Energy was poor, -4.85% followed by Info.Tech. -4.29% and Materials -3.79%.  Financials performed relatively well compared to resources, down -1.32%.  

Momentum.

A quick way to judge momentum is to compare the Weekly RSI and the Daily RSI.

By this method, XUJ, XSJ and XXJ have positive momentum.  

XXJ looks like a poisoned chalice.  Care needs to be taken in judging the relative merits of stocks in the Financial Sector.  Banks are still performing poorly, while Insurance stocks are doing well.  QBE was up this week, +0.79%, but suffered selling in the latter part of the week.  Medibank Private up +0.84%.  IAG up 2.54%.  Compare that to the banks.  ANZ -1.98%.  Westpac -0.77%.  NAB -0.27%.  CBA -0.85%.

I wouldn't rule XIJ out at this stage, even though momentum is negative.  XIJ did very strongly this week and may be returning to further strength.  But, the chart is saying to stick with Energy, Materials and Financials.

If looking for an alternative investment, Bitcoin seems to be back in bullish mode this week, up 16.52%.

I still like the Info.Tech. sector - but it is for trading not buy-and-hold.  None of the large caps in XIJ look appealing at the moment, but they'll come good again.  Traders can do well in stocks like WTC, XRO, TNE, NXT.

Mean Reversion.

The stock market tends to be mean reverting:  after a big rise, or a big fall, the market tends to revert to a longer term mean.

One set of data I keep which is something of a guide to when mean reversion will occur, it the difference between Implied Volatility and Historical Volatility.  Implied volatility is forward looking and historical volatility is backward looking.  Here's my chart for IV-HV:

IV-HV is now almost back to the level last seen in late March.  That was when a big fall in the XJO ended and reverted to the top side.  The XJO could fall a little more before IV-HV hits the same level as in late March, but its not far off.

Conclusion.

It's been a crazy week in the Ozzie market this week.  But the volatility might be coming to an end.  

Anything can happen in the stock market, as we've seen in the past two weeks with big jumps to the upside and the downside. 

A lot of factors are lining up, however, to suggest we'll see another move to the upside in the near future.

July is often a strong month in the stock market.  So be ready to pull the trigger.

24/6/23. Saturday Finspiration Report.

 Friday - felt like Armageddon.  XJO down,  Dow down, Nasdaq down, Europe down, Commodities down.

Armageddon - that is - if you're a normal person - but those dark villains on the "short" side (and I'm not talking about Friends of Snow White or Santa's Little Helpers) were chugging Dom Perignon out of crystal slippers previously worn by Princess Beatrice, who is by now sleeping rough in Piccadilly Circus.

XJO down -1.34%.

That takes the XJO down to just below the 200-Day MA - where it's been a couple of times recently - and then recovered.  

Well - anything is possible in this crazy stock market world, but this looks very different from those two previous efforts of flirting with the 200-Day MA.  

In the U.S. last night:

Dow Jones -0.65%.  SP500 -0.77%.  Nasdaq -1.01%.  Mid Caps -1.16%.  Small Caps -1.65%.  Banks -1.08%.

SP500.

SP500 is nowhere near as dire as the XJO.  It is way above the 200-Day MA.

As I've noted in the past, XJO decoupled from the American market a long time ago - that's due to the out-sized influence of Technology on the U.S. market - whereas, the Australian Tech sector has a small impact on our market.  The Oz market is more influenced by the resources sector which depend on China and Japan for markets.

Still, SP500 is showing weekness.  The three indicators in the lower panels are all on sell signals.

Two out of three super-trend lines have turned bearish.  But, the SP500 is back to the mid-line of the Andrew's Pitchfork, which suggests it might find support at that level.  We shall see.

Commodities.

Commodities Index -1.08%.  Energy -0.26%.  Base Metals -1.96%.  Agriculture -1.91%.  Gold +0.28%.

Those Energy and Base Metals prices provide little joy for our resources sectors.

In Sydney, SFE Futures for ASX200 is down -0.23%, which suggests a weak opening on Monday.

23/6/23. Friday Morning Finspiration Report.

 In the U.S., Nasdaq up, Dow Jones flat.  

Dow Jones -0.01%.  SP500 +0.27%.  Nasdaq +0.95%.  Mid Caps -0.55%.  Small Caps -1.01%.  Banks -2.32%.

SP500.

Last night's bullish engulfing candle suggests that the pull-back is over.  I'd like to see follow-through buying.

Commodities.

Commodities Index -1.86%.  Energy -2.9%.  Nsdr Metals -0.16%.  Agriculture -0.99%

After 15 minutes of trading this morning, XJO is down -0.4%.

22/6/23. Thursday Evening Finspiration Report.

 XJO down heavily today. -1.63%.  Sell signal given by triple Supertrend lines.

NewHighs-NewLows Cumulative remains on a sell signal.

Triple RSI's are bearish.  Daily>Weekly.  Weekly>Monthly.

I don't have a crystal ball - I just follow my signals.

Anything can happen - but the signals are usually reliable.

Stay safe.

21/6/23. Wednesday Evening Finspiration Report.

XJO down today. -0.58%.

The index remains in an up-trend but has stalled at a major horizontal resistance level..  This might be the start of a pull-back but we need to see more evidence.

 

21/6/23 Wednesday Morning Finspiration Report.

 U.S. markets finish lower.

Dow Jones -0.72%.  SP500 -0.47%.  Nasdaq +0.16%.  Mid Caps -0.73%.  Small Caps -0.43%.  Banks -1.01%.

SP500.

SP500 gapped down at the opening suggesting this rally is over.

Intra-day buying kept losses fairly low.  

Any further pull-back should be an opportunity to buy-the-dip.

Commodities.

Commodities Index -0.89%.  Energy -1.25%.  Base Metals -1.78%.  Agriculture -0.41$.  Gold -1.04%.

Gold broke down from its recent consolidation - more down-side looks likely.

Plenty of intra-day buying occurred in Energy - it remains in a sideways consolidation.

In early trading this morning, XJO is down -0.2%.  Resources are affected most with the big miners all down.