Monday Evening Thoughts. 22 May, 2017.

May 22, 2017 Comments off

Did you buy?  Or are you still waiting?

Screen Shot 2017-05-22 at 9.02.13 PM.png

Let’s look at a few charts.  Here’s the XJO chart ending today:

Screen Shot 2017-05-22 at 9.03.15 PM.png

XJO up strongly today, +0.76%.  XJO range was a little above the 10-Day Average.  Volume for the broad market, even for a Monday, was low.  So, bulls were able to move the price higher without much resistance from sellers.

This looks like the start of a short-term upside move.  Major horizontal resistance will prove an important test.

Our market remains hostage to the Financials, dominated by the Big Four Banks.  Here’s the chart for XXJ (Financials X-Property):

Screen Shot 2017-05-22 at 9.12.31 PM.png

Today’s action in XXJ was positive but less than impressive.  Today’s candle was an “inside day”, suggesting some indecision.  With XXJ making up nearly 40% of our market, we need to see a better performance to ensure we’re going into an uptrend.

At this stage, I’d say we’re looking at a counter-trend rally.  Watch what happens when we get to major horizontal resistance at 5810.  XJO finished at 5771.2.  That’s about 0.7% away.  Easily reached in one day.

Bottoms are rarely a one-day event.  We might have to see a bit of to-and-froing before we see a decisive test of major horizontal resistance.

RB.

Categories: Uncategorized

Sunday Smorgasbord. Weekly Report for the week ending 19 May, 2017.

May 21, 2017 Comments off

Executive Take-away. 

Market is set up for a rally, but it may only be a counter-trend rally.

CONTENTS

  • XJO Charts, Daily, Weekly, Monthly.
  • Internals – Australian Market.
  • Sector Watch 
  • Summing Up.

XJO Charts, Daily, Weekly, Monthly

XJO Daily:

xjo dly.png

The Standard Error Channel has been broken to the down side.  The short-term trend is down.  For several months, the 49 Day EMA has provided support.  That support has been broken and the 13-Day EMA has had a bearish X-Over below the 49-Day EMA.  Indicators are oversold, so a bounce is due.  The most likely possibility is a test of major overhead resistance and then another fall.  A break above resistance would be bullish.

XJO Weekly:

xjo wkly.png

XJO finished down this week, -1.18%.

The rising oblique trend line from early February has been broken to the downside.

The 13-Week EMA has been broken to the downside.

Indicators are on sell signals.

XJO Monthly:

xjo mnthly.png

XJO down this month -3.32%.

This chart still has nearly two weeks left to run.  If the current configuration worsens just a little, we’ll have a bearish monthly chart.  CCI and RSI are both below their 5-Month Moving Averages.  A little more downside would put DZ Stochastic below its 5-Month MA.  The chart would show a bearish three-candle reversal coming at resistance.

INTERNALS – AUSTRALIAN MARKET.

XJO was down strongly this week, and that is reflected in the Internals.

First, the Sector changes for this week:

sector changes.png

Only two out of 11 sectors this week were positive.  Nine were negative.  (XGD is not a sector, but a sub-industry).  The best performer was Telecomms.  (Who would have thunk that!)  The only other Sector on the positive side was XMJ (Materials).

We can see that there was a some move to risk assets this week, with Materials and Gold Miners the major beneficiaries.  The big loser was XXJ (Financials X-Property) down -3.61%.  That prevented the market making any upside ground.

The number of stocks in the ASX100 above the 200-Day MA fell this week from 76% to 72%.  This is a long term trend indicator and is currently sideways.

The Number of stocks positive on the Directional Movement Histogram fell this week from 68% to 40%.  This is a shorter term trend indicator and can move more rapidly, week to week, than the long term indicator (stocks above the 200-Day MA).  It is now bearish below the 50% level.  This congruent with the action we’ve seen in the charts above.  Further falls will also see a change in trend for the Stocks >200DMA.

200DMA DMH.png

This chart puts the market in to indecisive territory, but deteriorating.

SECTOR WATCH

Sector mom.png

We can see from this chart that Financials X-Property (XXJ) is obviously deteriorating.  XXJ makes up nearly 40% of our market.  So any deteriorating there is a problem.  The best performing sector on a short term basis (52-Day MOM) is XNJ (Industrials).

SECTOR CHARTS (Daily)

XMJ (Materials)

XMJ was up this week +1.22%.

xmj.png

The long-term trend remains down, but, significantly, XMJ has risen above its 200-Day MA.  From early May,  XMJ has outperformed XJO and is now above its zero line on the Mansfield Relative Strength. That’s another plus.

This could still be a counter trend rally within the longer term down trend.  Watch what happens if the XMJ gets up to the top of the Standard Error Channel.

XMJ has been on a short term buy signal since 5 May.

Iluka remains the strongest stock in the sector followed by Boral.  Both have a Momentum reading >1,  which is a significant strength.  In third place, interestingly, is Rio.  Its Momentum rating is 0.68, weaker than ILU and BLD.

XEJ (Energy):

xej.png

XEJ has a poor week, down -0.91%.  It is currently in a short term down trend and on a short term sell signal.  It remains above the 49-DMA.  Look for a bounce here.  (Energy was up strongly in the U.S. on Friday, so that strengthens the case for a bounce here.)

Caltex and Origin are the strongest stocks.  Caltex is very overbought – wait for a pull-back.

 3. XXJ Financials X-Property:

xxj.png

XXJ had a poor week, -3.61%.

The XXJ is now extremely oversold.  RSI is <30.  Stochastic <10.  CCI has levelled out – showing a positive divergence.

The Index is down to major supports (horizontal and 200-Day MA).  Interestingly, the 200-DMA and 200-WMA are almost at the same level.  That’s a rare degree of congruence.

This is set-up for a rebound.

The strongest stocks are all fund managers:  Henderson, IFL and Magellan.

Challenger (CGF) is the next best of the XXJ stocks.

The four major banks are all on the far side of negative on the momentum chart.  Westpac is the worst of them.  CBA the best.  That could be an artefact of ex-dividend events.  WBC recently went ex-dividend.  CBA’s ex-dividend dates are out of sync with the other three big banks.

Wait until we see improvement before trying to buy these.

XUJ Utilities

xuj.png

XUJ is a consistent top performing sector.  It’s in a long-term uptrend, but currently in a short-term downtrend.  The short-term downtrend could be a bull flag – watch for a solid upside move.

All AXS100 utility stocks are performing relatively well.   Most pay solid dividends.

XNJ Industrials

xnj.png

XNJ down this week, -0.69%.  It is currently in a short-term downtrend.

Some of the strongest stocks in the ASX100 are in this sector.  Momentum ratings:  Qantas  2.01, Sydney Airport 0.99, Aristocrat Leisure 0.99, and Seek (SEK) 0.9 are the top momentum stocks.   Buy these on any dips.

XSJ Consumer Staples

xsj.png

XSJ performed poorly this week, down -2.85%.  It remains in a trading range, so we’ll probably see a pop upwards here.

Treasury Wines (TWE) and Graincorp (GNC) are both doing well.  GNC Mom. Rating:  >1 is quite strong.  TWE Mom. Rating: 0.78.

There’s nothing between the two big supermarket stores (WOW and WES).  Both pay good dividends.  These are two for the long haul.

XHJ Health

xhj.png

Health down this week, -2.74% is in a solid long-term uptrend.  It is consistently one of the best-performing sectors.

It is currently in a short-term downtrend.  That’s the first one since early 2017. It is now down to the 49-Day EMA.  Look for a bounce here.

Primary Health Care (PRY) remains the strongest momentum stock, Mom. Rating 0.9.  It is now back below its 200-Day MA so be cautious.  CSL and COH are always worth a look.

XPJ Property

xpj.png

XPJ has fallen this week in sympathy with the banks.  Down this week -1.99%.

It is now down in a War (or Congestion) Zone.  If we get a bounce here, it should make for the start of a good rally.

The shopping centre stocks remain a drag on the sector.  The strongest stock is Goodman, Mom Rating, 0.72

XGD Gold Miners

xgd.png

XGD up this week +0.6%.  On Thursday, XGD had a big move up to resistance and then collapsed.  The bearish reversal day was confirmed with a down day on Friday.

This is a volatile industry group with a lot of small cap companies.  Good traders can make money here, but it’s not for investors – unless they’re convinced we’re entering a secular bear market, when Gold tends to outperform.

XDJ – Consumer Discretionary.

xdj.png

XDJ down -0.83% this week.  Thursday and Friday saw two days where we had bullish intra-day reversals.  This is trying to go back to the upside off dual support.  That usually works.  Look for an upside move here.That’s a very nasty downside candle for XDJ on Friday.  That wasn’t due to just one stock collapsing – but quite a few of the solid stocks had down days.

Harvey Norman, despite Gerry telling the shorters to “piss-off” continues to be under attack.  Stay away.

It’s not all doom and gloom in the XDJ.  FLT has had a big move since early-April.  It remains one of the strongest momentum stocks in the ASX100, Mom. Rating 1.76.  Buy-the-Dip.

The strongest momentum stock is Fairfax (FXJ) as the result of a take-over bid.  Leave that to the professionals.

XTJ Telecoms.

xtj.png

Telecomm up this week +1.48%.  The recent upside move by XTJ is probably a counter-trend move.  Maybe not. On a momentum basis it is the second worst performing index – XXJ is worse.

Summing Up:

Our market finished down this week -1.88%.  Nine out of 11 sectors were negative.  Technically, a lot of damage has been inflicted.

This week saw some strength in risk assets:  Materials and Gold Miners.  Many sectors appear set up for a move to the upside.  Given the technical damage that has been inflicted, it may be only a counter trend rally (if it happens).

Look to buy strong stocks in strong sectors.  There are also some exceptional stocks in weak sectors.

RB

Categories: Uncategorized

Saturday Summary. 20 May, 2017.

May 20, 2017 Comments off

In America:

Screen Shot 2017-05-20 at 1.14.32 PM.png

DJ +0.69%, SP500 +0.68%,  Nasdaq 0.47%, NYA 0.95%, Russell2000 +0.46%.

The Banks sub-index (BKX) was up +0.87%.

SP500:

Screen Shot 2017-05-20 at 1.33.01 PM.png

Wednesday saw one of the American market’s characteristically irrational knee-jerk reactions spooking the market.  It served two purposes from a technical perspective.  First, the gap from 24 March was filled.  Secondly, the chart hit the bottom of the Standard Error Channel and has since bounced.  That’s positive for the bulls.

Commodities:

DBC +1.96%.  Energy +1.96%  Industrial Metals +2.5%.  Copper Producers ETF was up +3.13%.  Gold 0.5%.

All of that is positive for our market on Monday if we decide to sync with the Americans.  There’s no guarantee of that.

Australia on Friday:

Screen Shot 2017-05-20 at 1.43.29 PM.png

XJO had a narrow range, inside day on Friday, finishing down a little -0.19%.  Volume and Turnover on the ASX were exceptionally low.  Volume was 18% below its 10-Day MA, and Turnover was 21% below its 10-Day MA.  (XJO makes up about 80% of the total market so its Volume and Turnover would be similarly low.)

Friday’s trading in the XJO finished well off its lows, and in the top half of the day’s candle.

On Thursday, I made a case for the XJO to be at or close to a low for this pull-back.  Nothing occurred on Friday to change that view.

Full weekly report tomorrow.

RB.

Categories: Uncategorized

Friday Morning Joe. 19 May, 2016.

May 19, 2017 Comments off

In America:

Screen Shot 2017-05-19 at 10.02.56 AM.png

Wednesday Trumpski fall looks like an irrational one-day knee-jerk reaction.

DJ +0.27%, SP500 +0.37%,  Nasdaq +0.73%, NYA +0.09%, Russell2000 +0.37%.

The Banks sub-index (BKX) was up in line with most of the market +0.37%.

SP500:

Screen Shot 2017-05-19 at 10.10.13 AM.png

Indicators remain on Sell Signals.  They can go lower.  Tomorrow is Op-Ex Day, usually a narrow range high-volume event.  So we might have to wait till next week.  Wait.

Commodities:

DBC -0.27%.  Energy +0.24%  Industrial Metals -0.57%.  Copper Producers ETF was down –0.2%.  Gold -0.82%.  Iron Ore -0.8%.

Those good commodity prices are unlikely to save our market today (except for the Gold Miners).  The Copper Producers ETF is a better guide to our miners for today.

America hasn’t been much of a leading indicator for Australia in recent days.  So I’ll ignore the above.

After 15 minutes of trade, XJO is down about -0.3%.  Last night I made a case for our market being at or near a low.  Watch for evidence of a rebound later today.

 

RB.

Categories: Uncategorized

Thursday Evening Thoughts. 18 May, 2018.

May 18, 2017 Comments off

The market’s pulled back around 4% since its high in early May.  The question now is:  Should we buy, or wait?

Let’s look at a few charts:

Here’s the XJO chart ending today:

Screen Shot 2017-05-18 at 10.25.11 PM.png

The range today was the widest since 22 March.  That signalled the end of a ABC downturn which started 16 February.  (Note:  we did see some buying at the end of today’s trading.)

A wide range is often a sign of capitulation.  So, today’s downturn looks like it could be capitulation.  (Note:  we did see some buying at the end of today’s trading.)

Capitulation usually means high volume and poor breadth.  How did today’s volume stack up.

Screen Shot 2017-05-18 at 10.33.51 PM.png

Volume increased sharply over yesterday, and higher than any of the previous seven trading days.  So we do have a significant increase in volume.  Enough?  Maybe.

What about turnover?

Screen Shot 2017-05-18 at 10.42.35 PM.png

Like volume, turnover increased significantly over the past few days and is in the upper levels of turnover recorded since mid-March.  Enough?  Maybe.

How about breadth?

Screen Shot 2017-05-18 at 10.49.18 PM.png

On this chart, going back to the end of January, today’s breadth (Advance/Decline Ratio) is the second worst.  The worst was on 18 April, which was one day before the end of the mid-April decline.  The third worst A/D Ratio was on 22 March – and that finished the major decline from mid-February.

So on that basis, today’s poor A/D Ratio looks like it could be a capitulation day.

How about the Fear Index (A.VIX)?

vix.png

A.VIX rose sharply today and is close to the levels seen at capitulation in April and higher than we saw in March.  So – it’s close – that’s a “maybe”.

Summing up.  Do the technicals from today suggest we’ve reached a “bottom”?

  1.  Was today a wide range day?  Check.
  2.  Did Volume and Turnover on the ASX increase sharply today over the past few days?  Check.
  3. Was today’s breadth poor compared to events in the past few months? Yes.  Today’s A/D Ratio was the second worst since late January.  Check.
  4. Is the A.VIX at an extreme high level?  It’s the worst since the pullback April and worse than in March.  Check.

So.  We could be at a “bottom”.  The only trouble is – things can always get worse before they get better.  Oversold can always get more oversold.

But – it is time now to check the ammunition, and cock the guns.

We’ll know when to fire when we get a solid rebound day.

RB.

 

Categories: Uncategorized

Thursday Morning Joe. 18 May, 2017.

May 18, 2017 Comments off

In America:

Trumpski spooked the market.

Screen Shot 2017-05-18 at 8.39.38 AM.png

Screen Shot 2017-05-18 at 8.01.07 AM.png

And a great big hungry bear rode into the markets:

DJ -1.78%, SP500 -1.82%,  Nasdaq -2.57%, NYA -1.58%, Russell2000 -2.78%.

The Banks sub-index (BKX) was down -4.08%. (Ouch.)

It is what it is – bad.  Bad enough?  Probably not.  Here’s CNN’s Fear and Greed Meter:

Screen Shot 2017-05-18 at 8.13.18 AM.png

This probably has to get well into the “Extreme Fear” sector before stocks will respond positively

SP500:

Screen Shot 2017-05-18 at 8.20.29 AM.png

Negative Divergences are playing out.  Indicators are on Sell Signals.  They can go lower.  Wait.

Commodities:

DBC +0.67%.  Energy +0.82%  Industrial Metals +0.06%.  Copper Producers ETF was up -2.32%.  Gold +1.82%.  Iron Ore +1.8%.

Those good commodity prices are unlikely to save our market today (except for the Gold Miners).  The Copper Producers ETF is a better guide to our miners for today.

I’ve been loath recently to make any assumptions about our market based on overnight action in overseas markets.  The correlation between the Australian market and the American market has been insignificant for quite a while.  That might be about to change.

RB.

Categories: Uncategorized

Wednesday Evening Thoughts. 17 March, 2017.

May 17, 2017 Comments off

XJO down heavily today -1.1%.  Volume us up on the past couple of days (that’s normal for a Wednesday), but overall volume is very low.  This suggests that weak longs are bailing out, allowing for the sellers to capitalise.  Such a situation is usually short-lived.

Here’s the XJO chart.

Screen Shot 2017-05-17 at 10.00.52 PM.png

Here’s the Volume chart from the end of February:

Screen Shot 2017-05-17 at 10.08.26 PM.png

The question now is:  Has enough selling occurred for strong bulls to take control again?

Here’s the On Balance Volume Chart:

Screen Shot 2017-05-17 at 10.10.35 PM.png

This is an old-fashioned metric rarely mentioned these days.  It is, however, one that I put a lot of faith in.  Short-term this is rising while the stock chart is falling.

It peaked at the same time as the XJO, i.e., 1/05/17.  It bottomed, however, on 5/05/17.  Since then, XJO has continued falling while OBV has been in an uptrend.  That positive divergence suggests that strong bulls are quietly accumulating stock while the market falls

In that case, all we have to do is wait for a strong upside move.  Then we know that the pull-back is over and strong bulls are showing their hand.

It’s possible to see more selling.  But there’s not much more in it.

RB.

 

Categories: Uncategorized