28/8/23. Monday Evening Finspiration Report

 XJO was up today but remains in a consolidation pattern.

Chart for STW (ETF for XJO)

XJO up 0.63% today.  STW up +0.75%.

STW needs to finish above the 200-Day MA - that's the solid black line - to confirm a new up-trend.

Health +1.45% and Discretionary +1.36% were the two best sectors today, followed by Financials +0.78%.

The only negative sector was Information Technology -0.74%.

Our market followed on from a strong lead from America on Friday night, but that didn't flow on to major markets in our time zone.  Japan Nikkei down -2.05%.  Hong Kong -1.4% and Shanghai -0.59%.

In early trading this evening, Europe is up +0.64%, following on from Australia's good result today.  Pre-market trading in America is mildly positive, Dow Futures +0.25%

ealth

27/8/23. Weekly Finspiration Repor

STW Monthly Chart  (ETF for XJO)

 

 For the month of August (so far) STW is down -3.67%.

It's been range bound since November 2022.  So - if your portfolio is making money this year - you've done well.

Range 63.06-68.29, that's a range of 8%.

STW Weekly Chart.  (Tracking ETF for the XJO)

The range in STW since March has tightened up even more:  the range is 5%.  63.12-66.76  

That's a very tight range over such a long period of time.  It provides a handy guide now for going long or short when the Chart breaks out of that chart.  We still have September and October to negotiate which often result in stomach wrenching drops.  Wait and see.

This week, XJO was a down modestly, -0.46%,  STW down -0.4%.

Sector Performances this week.

 

 Three sectors up this week, but one of those (Financials) just positive +0.04%. Gold Miners, a sub-section of Materials is the standout on the above chart +3.81%.  

 

Best performing sector was Discretionary +1.78%.  If people are pulling in their belts due to cost of living, it's not showing up in the Discretionary Sector - but, then, the stock market tends to be forward looking, so it could be a positive sign.  (Perhaps all those politicians making mileage out of cost-of-living should enjoy their few moments of glory.  Then they'll be looking for the next issue to belly-ache about.)

 

Property was the other positive performer +0.34%.

 

Worst performer was again Health -2.73%.  Utilities was the other poor performer -2.25%.

Momentum.

 I use RSI from three different time scales to measure relative changes in momentum:  monthly, weekly and daily.

Using this I sort Sectors into Bullish, Bearish, Pull-back and Counter-trend rally.

Bullish:  Discretionary, Property.  (Last week, only Property was in the Bullish group).

Bearish:  Financials, Materials, Energy, Telecommunication Services, Staples, Utilities, Industrials, Gold, ASX200.

Counter-trend Rally:  Health.

Pull-back:  Information Technology.

It's probably best to avoid stocks in the Bearish Sectors, and look for opportunities in the Bullish, Pull-back and Counter-trend Rally Sectors.

100 Leader Stocks above their 200-Day, 50-Day and 10-Day Moving Averages.

Above their 200-DMA:  last week 46%, this week 31%.

Above their 50-DMA:  last week 43%, this week 33%.

Above their 10-DMA:  last week 24%, this week 33%.

Those figures are poor.  Short-term, an improvement has been seen (stocks above 10-DMA) but not enough to get excited about.  The longer-term readings remain bearish and getting worse.

Inter-market Correlations.  Bonds/Stocks

 

The most watched inter-market correlation is the Bond/Stock correlation.  Unfortunately, the correlation is not a stable one.  A positive correlation existed for most of the 20th Century:  i.e., bonds up, stocks up; bonds down, stocks down.

For most of this century, the correlation has been negative.  Bonds down, stocks up; bonds up, stocks down.

Then, in 2020, inflation raised its ugly head, and the correlation is again positive.  Bonds down, stocks down.  And that's where we are now. 

The general trend is down with the occasional counter-trend rally.  The chart is currently at a multi-month low.

Money Flow Index is at an extreme low level.  Rarely does MFI get below 20 before having a knee-jerk reaction back to the upside.  So we could be looking at a move up in the price of bonds in the near future (interest rates down) - that would be a positive for stocks.  This could be a warning sign that stocks are likely to enter an upside move.  This is not a timing mechanism - but a warning signal.

Conclusion.

The Australian stock market has been range bound in a relatively tight range for most of this year.

Watch for a break-out of that range.

The current out-look is murky - bonds could be signalling a move to the upside for stocks.  But I'll wait and see how the charts turn.

If all goes to plan, we should see a rebound this week off the lows, which could carry through towards the end of September.

Keep your fingers crossed - and follow the charts.

26/8/23. Saturday Finspiration Report.

Yesterday in the ASX, the Ozzie market followed the Thursday night U.S. market to the downside.

Last night (Oz time) Fed Head, Powell, spoke at Jackson Hole Symposium for World Central Bankers.  American markets were choppy but finished on the plus side.  (It's debatable whether or not his speech had any effect of the markets.)

Yesterday in Australia:

 STW (ETF for the XJO) fell heavily on Friday, down -1%.  XJO was down -0.93%, more or less the same as the STW.

Thursday saw indicators kick up but not enough to provide evidence that the down trend is over.

The chart remains at the low end of the Value Zone for the Volume Profile, so there is some chance of a move higher.

The "First Three Days of the Month" theory suggests that traders should wait for a move out of the range of the first three days of the month before taking positions.  That theory worked relatively well for traders in August.  A break lower from the range occurred on 16 August and the STW (XJO) has been in a down trend since.  This is clearly a "theory" to be used by swing traders not investors.

Overnight in America:

 Dow Jones +0.73%.  SP500 +0.67%.  Nasdaq +0.94%.  Small Caps +0.15%.  Banks -0.4%.

SP500.

The August fall in the SP500 was well predicted by the negative divergence on the MACD Histogram.

SP500 has been in a downtrend from the beginning of August, and, so far, indicators are not showing a let-up in the fall.

SP500 remains below the Tenkan Sen of the Ichimoku system.  That's the short-term conversion line.

Tenkan Sen remains below the Kijun Sen - that's the base line of the the Ichimoku system.

I'd stay away from this until I get some positive indications that the down-trend has ended.
 

 

24/8/23. Thursday Morning Finspiration Report.

 U.S. markets up, Nasdaq strong.  Gold surges.

 Dow Jones +0.54%.  SP500 +1.1%.  Nasdaq +1.59%.  Small Caps +1.07%.  Banks +1.14%.

SP500

 

SP500 remains in the "no trade" zone - the Kumo Cloud.  The top of the Kumo may cause resistance.  Then the SPX is faced with the 50-Day MA.

Indicators are generally positive.

The short-term trend is up.  Stay with that until otherwise indicated.

Commodities.

Commodities Indes +0.21%, but Energy was down -1.1%.  DBE appears to have formed a small head/n/Shoulders top - so more downside is expected.

Base Metals +0.77%.  Agriculture +1.04%.  Gold gapped up and finished +1.02%.

ASX opened 10 minutes ago and is up +0.4%.

23/8/23. Wednesday Evening Finspiration Report.

 ASX had a positive day but some selling occurred in the afternoon which took the top off some of the earlier gains.  XJO finished up +0.38%.

STW (tracking ETF for the XJO) finished at resistance of the Kumo Cloud and Supertrene (1/10).  

Dynamic Zone Stochastic is pinching together which usually precedes a big move - in this case to the upside.

Info.Tech., which had a good day yesterday +5.19% yesterday, was hit hard by a down-grade of Wisetech, the biggest stock in the sector.  XIJ down today -5.26%.  Wisetech fell -19.62%.

Staples +1.77% rebounded today after Woolworths had a good result.  WOW up +3.51%.  It had been up much higher earlier in the day but suffered selling in the afternoon.

The current volatility is being driven, of course, by company reports. Some good, some not so good.

Early trading in Europe is again positive with Euro STOXX600 up +0.61%.  Dow Futures up +0.41%.  But, as we have seen recently, early trading can evaporate easily as the night wears on.

23/8/23. Wednesday Morning Finspiration Report.

 Optimism in early evening trading last night, fell away.  Europe finished higher, but Dow and SP500 were down and Nasdaq flat.  Ozzie Futures are down a little this morning.

Dow Jones -0.51%.  SP500 -0.28%.  Nasdaq +0.06%.  Small Caps -0.23%.  Banks -2.62%.

Banks are under pressure after many were downgraded by a ratings company.

SP500

SP500 remains within the Kumo Cloud - that's the "no trading" zone.  It has come up to the top of the Cloud and opposite the "Point of Control" on Volume Profile to the left of the chart.  SPX is also facing overhead resistance from Supertrend and then 50-Day MA.  Tough going.

Commodities.

 Commodities Index flat +0.04%.  Energy -0.01%.  Base Metals +0.95%.  Agriculture -0.61%.  Gold +0.16%.

After a few minutes of trading this morning, XJO is down a little -0.1%.

Woolworths reported before the market opened this morning.  Yesterday it was it hard by a poor report from Coles, but this morning it has opened up more than +3% above yesterday's closing price.

22/8/23. Tuesday Evening Finspiration Report.

 ASX flat today, XJO up just +0.09%.

Plenty of intra-day buying today with STW finishing above its opening price after dropping in early trading.

The chart shows overlapping candle-sticks the past few days different from the big gaps above the current congestion zone.  Those gaps will invariably be filled at some time.

Dynamic Zone Stochastic is close to giving a sell signal and the Bands are closing together - so the next move should be to the upside.

To have much confidence in any upside move, the chart needs to get above the Kumo Cloud of the Ichimoku system.

At this stage, the next move is likely to be to the upside.

Best sector by far today was Info.Tech. +5.19%.  That came on the back of a good night in the Nasdaq which had its best day so far in August.  XIJ is showing a good deal of confidence in that big number today so that will probably back the upside move which I think is coming in the ASX.

Worst today was Staples after the market thought poorly of the report from Coles, down -7.08%.  That was a seismic shock felt in Woolworths, down -3.03%.  That takes Woolies down to a support level, but we might need a couple more days to see what the fall-out is like for Coles and Woolies.

BHP reported today and fell -0.71% which isn't too bad when compared to Coles.  BHP also showed intra-day buying - which suggests cool heads weren't to concerned by the initial drop in BHP.

 BHP is at a major horizontal support line and a high volume node (on the left of the chart).  So more upside will probably be seen.

European stocks have started the evening well.  German DAX up +0.97% and French CAC up +1.17%.  US Futures are positive.  Dow Futures +0.15%.  Nasdaq Futures +0.42%.  So the evening is starting off well.