26/10/23. Thursday Evening Finspiration Report.

XJO finished down -0.61% but well off its early lows.

RSI is well oversold currently sitting at 31.18.  Currently, it is showing a small positive divergence from the low of 6 October, the date of the incursion by Hamas into Israel.  MACD Histogram also shows a positive divergence.

The index is in a long down-trend from early August, currently down -9.27%.  That's close to the "official" definition of a correction -10%.

This appears to be setting up for a rapid reversal to the upside.  Wait.

Yesterday, we saw some disappointing inflation figures - higher than expected.  That may put pressure on the RBA to raise interest rates.

RBA Governor Michelle Bullock gave a speech today which was relatively dovish - not what was expected.  As a result, likelihood of a rate hike fell to 31%.

Only two sectors were up today, Utilities +1.3% and Materials +0.14%.

Worst sector today was IT -2.56% and Property -2.07%.  Both are interest rate sensitive sectors.  I guess they didn't read the RBA memo.  :)

Europe is down heavily in early trade.  STOXX600 -0.95%
 

26/10/23. Thursday Morning Finspiration Report.

 U.S. Stocks fall into negative territory, with Nasdaq down strongly.

Dow Jones -0.32%.  SP500 -1.43%.  Nasdaq -2.43%.  Small Caps -1.26%.  Banks -0.3%.

SP500

 SP500 remains in a down-trend - but is oversold so we could see a counter-trend rally.

MACD Histogram and Force Index are both showing positive divergences, so that reinforces the idea that we will see a counter-trend rally.

Commodities.

 Commodities Index +0.73%.  Energy +1.36%.  Base Metals -0.11%.  Agriculture -0.46%.  Gold +0.42%.

Energy is usually inversely correlated to Stocks.  Energy up, Stocks down.

After an hour of trading this morning, XJO is down about -0.6% but off its lows.

25/10/23. Wed. Evening Finspiration Report.

 Well - it could have been worse, i.e., the inflation numbers today.  But they were bad enough, and blew up a promising start to the Ozzie market this morning.  XJO finished flat -0.04%.

The long upper and lower wicks on the small bodied candlestick today gives some idea of the violent jerking around suffered by the market today.

Yesterday's candle was an inside day (range inside the range of the previous day).  Today's candle remained within the range of Monday.  So nothing much has changed.  Look for a break of today's high or low for some idea of future direction.

25/10/23. Wed. Morning Finspiration Report.

 Positive results overnight in the U.S.  Energy down - that's good for the U.S. market.  Gold down.

Dow Jones +0.62%.  SP500 +0.73%.  Nasdaq +0.93%.  Small Caps +0.66%.  Banks -0.03%.

SP500

 SP500 has bounced nicely off the 200-Day MA and horizontal support.  That's a good start.  It needs a lot more work to prove its bullish credentials.

Commodities.

Commodities Index -1.09%.  Energy -1.94%.  Base Metals +1.33%.  Agriculture -0.09%.

After an hour of trading this morning, XJO is up nearly +0.4%.

Late news:  XJO has now plunged - as at 11.30 is down about -0.2%.  Inflation figures must have been bad for the markets - interest rates to rise?
 

24/10/23. Tuesday Evening Finspiration Report.

 ASX had a low volatility day today after three days of high volatility.  XJO up +0.19% but well off session's high of +0.5%.

Today was the narrowest range of the past four days and an inside day.  Notation for such an event is ID/NR4.  This is an infrequent pattern.  A break above or below from the high/low of today should involve an increase in volatility and provide short-term direction.   Click here for more on this pattern.

Given that the XJO is oversold and showing a positive divergence on the MACD Histogram, I would think that the most likely direction is up.

Six Sectors were up today.  Best was Materials (XMJ) +0.85%.

The five Sectors down today were:  Staples -1.02%, Utilities -0.51%, Health -0.29%, Property -0.23% and Communications -0.2%.  There's a bias in that group to Defensives.  So we had some switching today out of Risk Off into Risk On.  That's a positive sign.

Economic data out today showed a slowing in the economy.  Manufacturing PMI down from 48.7 in September to 48 in October.  Services PMI dropped from 51.8 in September to 47.6 in October.  Numbers above 50 indicate expansion.  Under 50 indicates contraction.  That's good news for interest rates (going down) but bad news for the economy.

In early Tuesday trading in Europe, stocks are down a little, STOXX600 -0.17%.  Dow Futures up +0.24%.  That's not necessarily a great guide to what will happen today as we've seen in the past.

It will be a busy night (Oz Time) for company reports in the U.S.  Some of the biggies coming Tues. are: Microsoft, Alphabet, Visa and Coca-Cola.  Those reports could be market moving.

24/10/23.

 Last night in America major indices finished mixed.  After the lunch session the major indices were all at least marginally higher, but afternoon trading sent Dow Jones and SP500 into negative territory while Nasdaq remained positive.

Sydney Futures finished in negative territory.

America Last Night.

 Dow Jones -0.59%.  SP500 -0.17%.  Nasdaq +0.27%.  Small Caps -0.95%.  Banks -0.95%.

SP500

 Last night's candle shows long wicks on top of a narrow body.  That's indicative of a major battle taking place between opposing forces (bulls and bears).  It is notable that the battle is taking place right at the 200-Day MA - usually taken as the dividing line between bull and bear market.

2-Day EMA of Force Index was low enough on Friday to suggesst a possible low (below bottom Bollinger Band).  It moved up last night.  It needs to get above both the 13-Day EMA and the centre line (20-DMA) of the Bollinger Bands to feel sure that a low is in place.

Commodities.

Commodities Index -0.64%.  Energy -1.74%.  Base Metals -0.11%.  Agriculture +0.05%.  Gold -0.34%.

After an hour of trading today XJO is up about +0.3%.
 

23/10/23. Monday Evening Finspiration Report.

 In my Weekend Report yesterday, I as relatively optimistic about the medium term outlook for the Australian market.  The ASX today was down again heavily and clearly finished below the 6900 support level, which is a bearish event.

So - have I changed my mind.  Not at this stage.  I'm getting more and more bullish non-confirmations of this bearish fall on a number of indicators that I keep.  Some of these are arcane, but do add further weight to the thesis that we're not far from a turn-around.  Tuesday is often called Turn-Around Tuesday by technical analysts.  We'll see tomorrow if Tuesday lives up to its nick-name.

Here's the chart for XJO today:

 The chart is clearly below the major support level of 6900 (round figures).  We still have that pesky positive divergence showing on the MACD Histogram which suggests we're not far off a bottom.

Here are a few more charts with positive divergences which suggest that the ASX is not far off a bottom.

Above is a chart for NewHighs/NewHighs+NewLows.

I put a fair degree of weight on this data set.  A positive divergence between the low of 6/10/23 and now is clear on the chart.  6/10/23 was the date of the major Hamas incursion into Israel.

Historical Volatility

Volatility is usually expected to rise during times of crisis.   Volatility acts inversely to the stock market. Yes, HI has risen but is still well below the height seen in early October, and nowhere near periods of bearish sentiment back in July and March.

 Bonds/Stocks 

In crisis periods we expect Bonds to outperform Stocks.  Bonds are considered a "safe haven" in times of crisis.  Below is the chart of the ratio of Bonds/Stocks.

 Since early October, Stocks have performed surprisingly well compared to Bonds.  The Ratio of Stocks/Bonds was deeply negative in early October - now it is slightly positive in favour of Stocks.  Curious.  

Health.

The big surprise in the market today was the good performance of the Health Sector which has been in the dog house for many months.  Today XHJ was the best performing Sector on the ASX, XHJ up +1.53%.  This might just be a turning point for Health for long-suffering investors in Health Care Stocks.  Still - we need to see a new up trend develop before getting too excited.  But a bullish engulfing pattern coming at the end of a long down trend is a good start.  And, we have a confirmed positive divergence on the MACD Histogram, i.e., the histogram is moving up from a higher low.

  Good luck