Capitulation? Tuesday Evening Report. 9 February, 2016.

February 9, 2016 Comments off

Today looked like Capitulation Day especially in the Financials, which dominate our market.

Here’s the XJO Chart for today:

Screen Shot 2016-02-09 at 9.32.33 PM.png

Today was the worst down day since we saw the ugly days in August/September 2015.  Today was down -2.88%, but back in August, 2015 we saw a down day >4%.

But – lets face it – today was the worst day down in six months.

A “capitulation day”?  Probably.

Volume was very high at 127% of the 20-Day Average (which has been rising).

AdvancingVolume/DecliningVolume Ratio was 21.5%.  Usually a figure under 20% is required for a capitualtion day, but today was close.  Near enough?

Unchanged Issues today was at 291 – under the magical 300 level I’ve set for a capitulation day.  Not that far below 300 – but it does meet the criterion.

Indicators are generally showing positive divergences, so the possibility of a move up in the near future is good.

Let’s have a look at the XXJ Chart (Financials X-Property).

Screen Shot 2016-02-09 at 9.46.23 PM.png

Today was down -4.44%.  That’s the worst result since late August when the XXJ was down -4.92%.

Here’s the National Australia Bank (the worst performer in the four big banks):

Screen Shot 2016-02-09 at 9.50.56 PM.png

Today it was down -4.78%, a little worse than the late August 2015 result of -4.65%.

We never know for sure if we’ve seen a capitulation day until sometime in the future, but this is looking like a good candidate.

Capitulation days don’t guarantee a change in the long term trend, but a change in the medium term trend is a likely probability.

 

RB.

 

 

Categories: Uncategorized

Tuesday Brunch. 9 February, 2016.

February 9, 2016 Comments off

In America:

Screen Shot 2016-02-09 at 11.58.56 AM.png

Dow Jones -1.1%, Sp500 -1.42%, Nasdaq -1.82%, NY Composite -1.69%, Russell 2000 -1.65%.

Volume was high.  Long tails show intra-day buying.  Dow down more than 350 points at one stage finished down less than half that.  Nice looking positive divergences on MACD suggest we could see a surprise up move in the near future.

New Lows on the NYSE increased from 169 to 445.  The NH/NL Ratio is bearish at 10.64%.  We might need to see >1000 New Lows before this is over.

American Bonds:

Below is a Relative Strength Chart of  10Yr/30Yr Bonds.  When 10Yrs are doing better than 30 Yrs, we see a risk-on market.   Expect stocks to do well.  We need to see this chart turn up.Screen Shot 2016-02-09 at 12.38.51 PM.png

Screen Shot 2016-02-09 at 12.25.54 PM.png

 

This chart has been in a long downtrend, not helpful for stocks.  The Index is very oversold, with positive divergences on MACD Histogram and Slow Stochastic.  This is beginning to look positive for stocks.  But we’re not there yet.  It doesn’t matter what the indicators say, price pays.  A close above the 20-Day MA would add to the sentiment.

Commodities:

Screen Shot 2016-02-09 at 12.28.28 PM.png

U.S. Dollar last night UUP -0.24%.That didn’t help Energy -0.71%.  That helped Base Metals +1.44%, Precious Metals +1.46%, GLD +1.34%.  Energy, however, was down -1.95%.  Iron Ore remained at 44.7 where it’s been for three days.

The chart for GLD is very interesting.  A long upper tail shows intra-day selling on exceptionally high volume.  That suggests we’re seeing a top.  If it is, then the flight to safety might be over.  If it is, then stocks should rise.

Here’s a detailed chart for GLD:

Screen Shot 2016-02-09 at 12.38.51 PM.png

This is reading like a seismograph before a volcano erupts.

Exponential rise.  The most recent candle shows a big gap up and strong intra-day selling.  That’s occurring right at resistance.  GLD is extremely overbought, RSI above 78 and MFI above 80.  Huge Volume.  By far the highest volume in the past two years.  (I can’t reliably go back further than that.

This is set to implode (the inverse of a volcanic eruption).  If that happens, watch stocks rise.

RB.

Categories: Uncategorized

The Market’s Message. Monday Evening, 8 Feb., 2016.

February 8, 2016 Comments off

XJO today finished flat (down -0.1%) after being much lower (about -1%).  Nothing special about volume.

Here’s the XJO chart:

Screen Shot 2016-02-08 at 9.38.54 PM.png

The past two days have seen big intra-day bullish reversals.  They don’t mean much unless we see a big up day to follow.  Major Resistance from 2010/2011 continues to hold.

Financials were again weak.  Financials X-Property down -0.7%.  Here’s the Chart:

Screen Shot 2016-02-08 at 9.53.32 PM.png

The Financials X-Prop are hovering close to 52-Week Lows.  That’s not a sign of confidence.

The Miners continued their counter-trend rally today.  XMM up +1.6%.  But this is coming off a very low base.  Here’s the Chart:

Screen Shot 2016-02-08 at 9.43.59 PM.png

XMM has had three good up days, but the up-thrust is beginning to weaken.  The Medium Term Stochastic (50,10,10) has turned up, but the shorter DZS is very overbought so a turn-down is likely in the near future, possibly tomorrow.

Compare those charts to the following Defensive Sectors.

First, Utilities:

Screen Shot 2016-02-08 at 9.55.37 PM.png

Utilities today garnered another New 52-Week High.  That’s good for the likes of AGL, but the message is – this is a Risk-Off Market.  Utilities are a safe-haven when markets are weak.

Consumer Staples:

Screen Shot 2016-02-08 at 9.58.00 PM.png

Consumer Staples has been weak for a long time – largely due to the underperformance of Woolies.

The last two times that XSJ has crept above the 200-Day MA, it has quickly headed south again.  This time it seems to be consolidating above the 200-Day MA.  The chart pattern may be a rounding top so it could easily head south again, but, at this stage, it is doing much better than Sectors like Financials and Mining.  Again, this is a Defensive Sector – not as good a defensive bet as Utilities – but it is sending the same message.

Until we see that this market is taking on a Risk-On profile, it’s best to be cautious.  Keep the money safe – or put a bit into Utilities when that sector dips.

 

RB.

 

 

 

Categories: Uncategorized

Sunday Smorgasbord, Weekly Report, week ending 5 February, 2016.

February 7, 2016 Comments off

CONTENT

  1. Australian Market:  Weekly Performance Chart
  2. Risk-on, Risk-off.
  3. Australian Market. XJO – Monthly, Weekly, Daily Charts.
  4. ASX 100 – Stock Ratings
  5. America – Weekly.
  6. Summing up.

AUSTRALIAN MARKET:  SECTOR PERFORMANCES IN THE PAST WEEK.

Screen Shot 2016-02-07 at 4.04.23 PM.png

XAO down -0.61%.  Four Sectors were up (Utilities, Telecomm, Materials, Info.Tech), one was flat (Energy) and five were down (Industrials, Health, Financials, Consumer Staples, and Consumer Discretionary.)

The best performer this week was Materials, which has been a perennial loser.  This week up +4.44%.  It’s been a good performance by Materials this week, but, as in the past, it is probably a counter trend rally in an on-going secular bear market.  That will end one day, but until then, we have to continue to presume that any rally in Miners will be sold into.

Energy was flat this week.  That continues its volatile performance in recent months.  The week befor this it was the screaming hot winner.  So – continue to presume that any rally is a counter-trend rally.

Only one sector was up more than 1%,  the Materials Sector (mentioned above.)

Two sectors were down more than 1%:  Consumer Discretionary -3.76%, Financials -1.67%.

Nine Stocks from the ASX100 made New 52-Week Highs:  AGL, Aristocrat Leisure, Sydney Airports, GPT,  Transurban, CarSales.com, Star Entertainment, JB Hi-Fi, Navitas, CSL, Treasury Wine, Domino’s Pizza, Star Entertainment, JB Hi-Fi.

Ten Stocks made New 52-Week Lows:  Aurizon, Downer EDI, IPL, ORI, RIO, Macquarie Bank, NAB, Worley Parsons, Slater and Grodon.

You’ll find a sense of deja vu looking at these names.  Stocks making 52-Week Highs tend to continue making 52-Week Highs.  Stocks making 52-Week Lows tend to continue making 52-Week Lows.  New to the 52-Week Low list this week is Macquarie Bank.  Don’t expect it to recover any time soon.  All the others in that list have previously made 52-Week Lows.

42% of ASX100 Stocks are above their 200-Day Moving Averages down from 46% the previous week.  We need to see a figure above 50% to feel sure the bear market is over.

The Financial Sector made a new 52-Week Low.  Utilities made a new 52-Week High.

RISK-ON, RISK-OFF

There are two measures to look at to see whether or not sentiment is for Risk-On or Risk-Off.

When investors prefer Bonds and Utilities to other stock assets, the market is usually Risk-Off.

Here’s a Chart for Utilities, with the lower pane showing its Relative Strength against the Broad Market Index, XJO.

Screen Shot 2016-02-07 at 4.33.23 PM.png

Ups-and-Downs have occurred throughout the past year, but the general trend has been for Utilities to outperform the ASX200.  Risk-Off.

Unfortunately I can’t generate a similar RS Chart using ProRealTime for Bonds/ASX, but here’s a personally generated Relative Strength Chart for  IAF (ETF for Bonds) versus STW (ETF for ASX200):

Screen Shot 2016-02-07 at 4.36.13 PM.png

Again there have been ups and downs, but the trend, measured by the 50-Day MA (blue line) is inexorably up.  So Bonds have been outperforming Stocks = Risk-Off.

Until we see a change in Sentiment, it’s best to consider this market, in general, to be a dangerous place to be.

Bonds and Utilities are obviously exceptions.

AUSTRALIAN MARKET: XJO – Monthly, Weekly, Daily.

Screen Shot 2016-02-07 at 4.45.30 PM.png

This chart remains in serious danger of falling into major bearish territory.  The three indicators I’ve shown are all in negative territory.  The chart is teetering on the major horizontal Support/Resistance Line from 2010/2011.  If the monthly chart closes below that, I’d have to say that this is cactus.

Screen Shot 2016-02-07 at 4.51.35 PM.png

On the Weekly Chart, the MACD had a cross below its zero line back in mid-June.  The medium term action since then has been bearish.  Until the MACD crosses back above the zero line, its best to be cautious.  On the positive side, the MACD Histogram is showing a positive divergence from the Index Chart, so there is some hope that we could see a move to the upside.

Screen Shot 2016-02-07 at 4.58.19 PM.png

 

The Medium Term Stochastic (50,10,10) on the Daily Chart has turned up and nudged up above its 20-Day MA.  That’s positive..  The Shorter Term Stochastic has turned down, so a turn up while the Medium Term Stochastic is still turned up should make this a short term buy.  We might get a short term buying opportunity this week.

ASX 100 – STOCK RATINGS.

I might name this section “Follow the Money”.  These ratings look at the strongest and weakest stocks and sectors in the ASX100.  Sectors and Stocks doing better than the XJO should be considered by investors/traders.  That’s where the money has been going.  Remember that these are relative ratings.  A stock could still be going down, but going down much more slowly than the XJO so it would have a relatively strong rating.  In a bear market, look to defensive stocks with relatively high scores.  If a Sector or Stock is positive in the red bars – it is doing better than the XJO over the past 52 Weeks (one year).  If the blue bar is positive, the Stock or Sector is doing better than the XJO over the past 52 Days..

Below is a chart showing the relative ratings for the Sectors on a medium term (blue bars) and long term (red bars).   The strongest sectors are Utilities, Health and Consumer Staples.   These are all Defensive Sectors, i.e., Risk-Off.   Consumer Staples supplanted Consumer Discretionary in the top three this week.  But Industrials and Consumer Discretionary are close up.  The weakest sectors remain Materials and Energy.  Gold has been the star industry group for a long time.

Screen Shot 2016-02-07 at 5.02.57 PM.png

This chart is fascinating.  Basically, it is telling us that most sectors in the ASX aren’t doing too badly.  Our market is pulled down by the poor performances of Materials and Energy, and the so-so performance of the Financials.  The Financials are a big worry for our market.  XXJ (Financials X-Property) has now registered a 52-Week Low.  52-Week Lows often beget more 52-Week Lows.  Careful.  As it is the biggest sector in our market it has a disproportionate effect – while sectors like Utilities, Health and Consumer Staples are doing quite well.

As a general rule, avoid stocks in the weakest sectors, and look to stocks in the strongest sectors.  Clearly, the Miners and Energy are by far the weakest.  There are always exceptions.  Caltex in the Energy Sector has been doing quite well.  MPL in the Financial Sector is also doing well.  Woolworths has been improving in the Consumer Staples but its performance is a long way behind Wesfarmers.

To Make the Stock Ratings Charts more useable, I’ve grouped stocks according to Sectors.  Ratings for all sectors and all stocks in the ASX100 are provided.  These are all based on relative performance compared to the XJO.  Red bars are based on one year performances, and blue bars on 52 day performances.  In each chart, the Sector Rating is the first set, then the stocks in the sector in alphabetical order.

Utilities.  

Screen Shot 2016-02-07 at 5.07.58 PM.png

Every stock in this sector is performing creditably, but AGL is the standout performer in this Sector and made another new 52-Week High this week.  Strong stocks tend to go on from strength to strength (until they don’t).

Industrials.  

Screen Shot 2016-02-07 at 5.09.13 PM.png

Qantas, Aristocrat Leisure, Transurban and Sydney Airports continue to perform exceptionally well.   I’m beginning to have a few doubts about Qantas.  You can see that its medium term performance (blue bar) is not strong.  It’s a little oversold at the moment so it might have a strong rally coming up which will improve its medium-term performance.  But Qantas is worth watching to see if it turns negative.

Materials.  

Screen Shot 2016-02-07 at 5.10.26 PM.png

Some of the Miners had very good results this week.  The blue bars on AWC, FMG, S32 are all well into positive territory.  The blue bar on BHP is well ahead of its red bar.  So we could be seeing some improvement in the Miners – but it could just be a counter-trend rally.  It will take a while yet to decide.  Avoid until we see more positive action.

Materials also includes Building Supply stocks (e.g., BLD, BSL, CSR, DLX, and JHX) and Packaging stocks (e.g., AMC and ORA).   Dulux, Bluescope and Adelaide Brighton continue to perform well.

Financials X-Property.  

Screen Shot 2016-02-07 at 5.14.41 PM.png

There’s not much to recommend this sector.  The four big banks are performing poorly. NAB has hit another 52-Week Lows, and it has been joined by Macquarie in that dubious honour.. CBA is the best of the big banks. The fund managers were doing O.K. but have now lost momentum.

About the only stock showing strength is Medibank Private.

Health Long Term RS and Information Technology 

Screen Shot 2016-02-07 at 5.16.33 PM.png

Health is a mixed bag.  CSL and Cochlear continue to perform well.  RMD is not far off.  Those three are all in the research and development business.  There is a clear split in the Health Sector.  The R/D firms are doing well.  The Health Care Providers are doing poorly.

Carsales.com set another new weekly closing high for the year this week.

Consumer Staples.  

Screen Shot 2016-02-07 at 5.18.41 PM.png

TWE is the standout in the Consumer Staples.

If you must have another stock from this sector – then Wesfarmers is the choice.

Woolworths has improved a little with the news that it will divest itself of Masters, but it still needs to do a lot of work before being considered as a potential buy.

Energy.  

Screen Shot 2016-02-07 at 5.19.40 PM.png

Energy continues to perform poorly.

Oil Search was under possible take-over action and was up in the stratosphere.  Then fell back.  This week, however, it performed quite well.  One has to wonder if further take-over action might be in the offing.  Watch.

Caltex is different from the others in this group which are either primary producers or services to the drilling industry.  Caltex is involved in the secondary industry of refining the primary product and also involved in tertiary activities such as retailing.  It is the stand-out in this sector.  Worley-Parsons made another 52-Week Low this week.

Consumer Discretionary.  

Screen Shot 2016-02-07 at 5.21.54 PM.png

Consumer Discretionary is a mixed bag.  Pizza makers, casinos, electronics discounters, lawyers, real estate advertisers, etc.

Domino’s Pizza is one of the best performers in the ASX100.  This week it saw its share price fall.  It could become a buy opportunity at these levels.  Watch for a bounce.

JBH has been a star performer over the past few weeks.  It made another new 52-Week High this week.  Star Entertainment was another in this sector to make another new 52-Week High.  Strong stocks get stronger.

Telecomm.  TLS seems to be improving, but still needs to do more work to prove its bullish credentials.  It remains below the 200-Day MA.  It has to get above that to be considered as an investing opportunity.

AMERICA – SP500 Weekly.

Here’s the Weekly Chart for the SP500:

Screen Shot 2016-02-07 at 5.26.44 PM.png

SP500 down this week over -3%.

The SP500 continues to hover at the major support level of 1865.  A fall below there would be bearish.  Accumulation/Distribution remains strong.    We need to see the Stochastic (50,10,10) turn up to feel comfortable about the prospects of the American market.

Summing up:

The Australian market might not look crash hot and Utilities and Bonds are signalling that we’re in a Risk-Off Environment – but several sectors are doing quite well.  Utilities, Health and Consumer Staples, Consumer Discretionary and Industrials are doing well.  Look to good stocks in those sectors for buying opportunities.  The big problems lie in the two biggest Sectors:  Financials and Materials.  But many of the Miners had a very good week this week.  So it is possible that a turn-around could occur.  Just wait for more evidence.

In sectors which may not be doing so well, there are still some stocks in weak sectors that are going against the trend of the sector, e.g. Caltex in Energy, some Building Stocks in Materials, Medibank Private in Financials.

So don’t get sucked into all the doom and gloom in the newspapers.  There are still good stocks doing well.

RB

Categories: Uncategorized

Jobs Report. Saturday Morning Joe. 6 February, 2016.

February 6, 2016 Comments off

In America:

Screen Shot 2016-02-06 at 11.17.32 AM.png

Dow Jones -1.29%, Sp500 -1.85%, Nasdaq -3.25%, NY Composite -1.51%, Russell 2000 -2.87%.

The Jobs Report came out before the market opened, and it looked good with unemployment down to the Fed’s target level of 4.9%.  But, expectations were for 180,000 new jobs created – the number came in at 151,000, so, the market sold off.

New Lows on the NYSE increased from 68 to 169, unacceptably high.  NH/NL Ratio remains well below its mid-line at 26.5.

American Bonds:

Below is a Relative Strength Chart of  10Yr/30Yr Bond Yields.  When 10Yr Yields are doing better than 30 Yr Yields, we see a risk-on market.  Expect stocks to do well.

Screen Shot 2016-02-06 at 11.28.03 AM.png

This chart has been in a long downtrend, not helpful for stocks.  The Index is very oversold, with positive divergences on MACD Histogram and Slow Stochastic.  This is beginning to look positive for stocks.  But we’re not there yet.  It doesn’t matter what the indicators say, price pays.  A close above the 20-Day MA would add to the sentiment.

SP500 Chart:

Screen Shot 2016-02-06 at 11.48.58 AM.png

The low today is back to where it’s been three times in the past seven days.  Make or break time.  Indicators are all at break-down points of one kind or another.  Monday should be interesting.

Commodities:

Screen Shot 2016-02-06 at 11.52.12 AM.png

U.S. Dollar up last night (UUP +0.44%) which should have been negative for commodities, which it was except for the Precious Metals, +1.54%, and Gold, +1.58%.  Nothing seems to be able to stop the inexorable rise in the PMs.   Energy -1.02%.  Base Metals -1.99%.

Full Weekly Report tomorrow.

RB.

Categories: Uncategorized

Friday Morning Joe, 5 February, 2016.

February 5, 2016 Comments off

 

In America:

Screen Shot 2016-02-05 at 10.21.20 AM.png

Dow Jones +0.49%, Sp500 +0.15%, Nasdaq +0.12%, NY Composite +0.41%, Russell 2000 +0.44%.

Trading was very choppy.  Highs-of-Day were seen around 11.00 a.m. (NY time) when stocks followed oil prices down.  These major indices remain in sideways consolidations which usually resolve in the direction of the major trend, which is down.

New Lows on the NYSE decreased from 227 to 68.  That improvement is in line with the positive tone on the NY Composite Index, the broadest market benchmark.  NH/NL Ratio remains below its mid-line at 44.3.   Still not good enough.

American Bonds:

Below is a Relative Strength Chart of  10Yr/30Yr Bond Yields.  When 10Yr Yields are doing better than 30 Yr Yields, we see a risk-on market.  Expect stocks to do well.

Screen Shot 2016-02-05 at 10.36.01 AM.png

This chart has been in a long downtrend, not helpful for stocks.  The Index is very oversold, with positive divergences on MACD Histogram and Slow Stochastic.  This is beginning to look positive for stocks.  But we’re not there yet.  It doesn’t matter what the indicators say, price pays.  A close above the 20-Day MA would add to the sentiment.

Commodities:

Screen Shot 2016-02-05 at 10.39.29 AM.png

U.S. Dollar last night (UUP -0.67%) continued to fall after its very big drop in the previous session.  That didn’t help Energy -0.71%.  Base Metals +0.75%, Precious Metals +1.33%, GLD +1.21%.  Iron Ore +1.6%.

We’ll be weaker today, I would think.  The Miners might do OK.

RB.

Categories: Uncategorized

Bulls in Charge. Thursday Evening Liqueurs.4 February, 2016.

February 4, 2016 Comments off

XJO up +2.12%.  That almost wiped out the previous day’s losses when the XJO was down -2.33%.

Screen Shot 2016-02-04 at 10.56.34 PM.png

All the usual caveats apply.  We could be at the beginning of a strong up move, great for traders.  But until the 200-Day MA is broken, we have to think that these are hard biums.

RB

Categories: Uncategorized
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