The past week was positive for the Australian stock market, but weakness began to show up in the latter part of the week.
XJO Weekly Chart.
XJO up this week, +1.39%, erasing the loss from the previous week. The weakness in the latter part of the week is shown by the long wick on top of the week's candle.
XJO is currently trapped between two nearby support and resistance lines.
XJO Daily Chart.
The past three days shows a 3-day Candle-stick reversal pattern, an up day, a doji candle followed by a down day. The Doji candle appeared at horizontal resistance and resistance of the kijun sen (dotted line).
Ichimoku Theory suggests that if the chart is below the Kumo Cloud - sell the rallies. That's what happened this week.
Sector Performances this week.
Only one sector was down this week, Health -2.5%. Health has been a basket case for many weeks. Its problems were compounded this week by a big fall in CSL, its largerst component. CSL -3.52%
The best performing sector was Utilities, up +5.09%. Utilities can be a gay deceiver as it is a small sector and a big move in one component can skew the result. But this week there was plenty of action in Utility stocks. Origin, +6.31%, AGL +5.19%, APA +3.22%, IFT +1.37%, MCY +1.73%. So Utilities seems to be back on a bullish trend after being weak since late July.
Gold Miners (XGD) has been the beneficiary of fear generated by the Hamas/Israel War. Gold and Gold Miners tend to have an upside knee-jerk reaction in the early stages of war and then tends to revert to its mean.
Energy (XEJ) was also a beneficiary this week of the war in the Middle East. XEJ +3.27%. Energy tends to get jerked around by geo-political events. Best to look at the trend in Energy rather than depend on one week's figure.
100 Leader Stocks above their 200-Day, 50-Day and 10-Day Moving Averages.
- Above their 200-DMA: last week 36%, this week 35%.
- Above their 50-DMA: last week 15%, this week 32%
- Above their 10-DMA: last week 32%, this week 72%.
These figures are consistent with the big rise in the XJO this week - they also suggest that it has been a dead-cat bounce. Until we see a confirmed up-trend (a higher high and a higher low) it pays to remain cautious.
SPY, tracking ETF for SP5500 - American Market.
SPY has pulled back right at the Point of Control on the Volume Profile (left side of chart) and the Kijun Sen of the Ichimoku System.
Conslusion.
Until we see a confirmed new up-trend (higher high and higher low) I think it is best to treat the current upside move as a counter-trend rally (a.ka. dead-cat bounce).
Friday night (Oz Time) saw a remarkable session on the SP500. The candle is a "bullish engulfing candle", which, when it occurs at the end of a trend, is a strong "buy" signal.
Friday's action took the Index back above Supertrend (10/1) and 8Day EMA. Another "buy" signal.
Strong Stocks v Weak Stocks 100 Leaders.
This week saw a new record in this metric (an invention of yours truly).
This week there were no Strong Stocks in the ASX 100 Leaders. - the first time this has occurred since I started records back in February, 2021. I classify all stocks according to a variety of timing indsicators and give each stock a rating of 0-14. Stocks with a rating of 14 are classed as "Strong Stocks". Stocks with a rating of 0 are classed as "Weak Stocks".
Conclusion.
September was, predictably, poor - worse than usual - but not as bad as September 2022. Small mercies..
We're
coming into October, usually a better month than September. There are
plenty of signs to suggest that the worst may now be past and we could
be looking at some upside from here.
I think Financials (XXJ) are likely to lead the way higher.
How much the War in Israel will affect markets is unknown - that's why it's a black swan event. Probably for a few days - then it will blow over.
Meanwhile, observers remain cautious about the situation in Serbia/Kosovo - another flash point which could blow up.
Good Luck
