Nasdaq was up modestly. Others were flat after being down in the middle session. The afternoon session provided some intra-day buying. Two days flat, first day – intra-day selling, second day intra-day buying. Lots of indecision.
DJ +0.03%, SP500 +0.06%, Nasdaq +0.39%, NYA -0.12%, Russell2000 -0.16%.
The Banks sub-index (BKX) was up -0.69%.
Amazon and Alphabet both reported after market, and surged in after-market trading. That’s going to boost Nasdaq again in tonight’s trading (tomorrow NY time).
The short term trend is up. All MAs are in bullish alignment top to bottom, 5/13/49/200. CCI was very overbought and has now turned down a little. It probably needs more downside before the Index turns up. Money Flow is floating around the zero line which indicates indecision. Long term Stochastic has turned up and has crossed above its signal line. That’s a positive. Odds favour a small pull-back, then another test of overhead resistance.
DBC -0.54%. Industrial Metals -1%. Energy -0.41%. Gold -0.37%. Iron Ore rose unchanged.
Copper Producers ETF (COPX) down -1.87%.
Our market had a narrow range, low volume day yesterday. With a long week-end coming up, the volume will again be low. That provides the opportunity for trades to push the market around. Given a long weekend coming up, the unknown and poor overnight figures suggests we’ll see downside action today.
What’s going on in our market? Bugger all.
First let’s look at the chart:
Today was up a bit. +0.16%. Range was minuscule – the shortest since Methuselah was a pup. Volume was way down. How come? Dunno. It is Thursday – usually a reasonably good trading day. (Don’t tell me the traders are already taking off for a long, long, long weekend with Labor Day coming up.)
None of that persuades me that the above chart is about to turn down. Other than the fact it has been up five days in a row. (That’s stretching the friendship a bit to the upside.)
Here’s the volume chart – today’s volume was not much better than Monday, when everybody was up in Mooloolaba (or somewhere similar) throwing snags on the barbie and downing XXXX or Fosters:
Breadth figures are negative.
Frankly, I’m bewildered.
I have to go with the five-days up being about as far as we can go – plus we have no interest in this market. Next move – down (a bit).
Technically, the market was set-up for a pause or pull-back. News in America (Trump’s tax plans) didn’t help. Although up early, intra-day selling pulled the market down a little, except for the small caps, where the tax plans will have the most positive effect. A fall in the price of Oil also didn’t help matters.
DJ -0.1%, SP500 -0.05%, Nasdaq -0.00%, NYA -0.09%, Russell2000 +0.59%.
The Banks sub-index (BKX) was up +0.31%.
The short term trend is up. All MAs are in bullish alignment top to bottom, 5/13/49/200. CCI was very overbought and has now turned down a little. Money Flow remains positive. Long term Stochastic has turned up but still hasn’t crossed above its signal line. Odds favour a small pull-back, then another test of overhead resistance.
DBC -0.53%. Industrial Metals +0.5%. Energy -0.81%. Gold +0.49%. Iron Ore rose +1.5%.
Copper Producers ETF (COPX) up +0.23%.
POG hit support and bounced. CCI shows a positive divergence. More upside seems likely.
I’d expect a range day today with the possibility of upside, positive action.
No surprises today. XJO up +0.68%. The only surprise was – it could have been more.
Everything on this is now steadily bullish.
Just remember – Don’t Panic:
The only real casualty today was XGD (Gold Miners) down -5.46%.
It’s now marginally below the 200-Day MA. More downside seems likely.
That suggests we’re in a risk-off market. Bullish.
In America (while we were observing Anzac Day):
America has had two sessions of trade since we closed on Monday. The results are startling (see charts below).
In last night’s session the results were:
DJ +1.12%, SP500 +0.61%, Nasdaq +0.7%, NYA +0.62%, Russell2000 +0.94%.
Nasdaq has gone on (finally) to all time new highs, taking it above the Year 2000 high.
The Banks sub-index (BKX) was up +0.72%.
SP500 up in the past two days 1.44%. Both days show bullish movements on the Heiken-Ashi Chart. The Index had been in a down trend since the bull-trap was sprung on 1 March. The short term trend is up. All MAs are in bullish alignment top to bottom, 5/13/49/200. Awesome Oscillator, Directional Movement Histogram and Chaikin Money Flow have all turned bullish.
Before we get too carried away, we rarely see a trend continue upwards on a major index once it is above 250 on the CCI. SPX is now reading 246.67, that’s near enough to 250 to suggest a pull-back in the next day or so. Note also that the chart is at horizontal resistance. That increases the chance of a pull-back.
DBC +0.47%. Industrial Metals +0.69%. Energy +0.49%. Gold -1.01%. Iron Ore rose +0.3%.
Copper Producers ETF (COPX) up +0.71%.
VIX fell sharply in Monday’s trading but shows a doji candle for Tuesday, which reinforces my comments above that the market might be ready for a pull-back
Australia no longer has a strong correlation to the American market, in fact, the correlation is very weak. It’s difficult to see, however, that we won’t be up strongly today. SPI, (Futures Index) is pointing to a positive opening, but at +25 points, that index (SPI) is not especially strong.
Ozzies love a long, long weekend. And Anzac Day provides another opportunity.
So, volume today was way, way down. I don’t think you can make many conclusions about today from our market.
Our market popped strongly on opening after the French Elections, and then we fell away to be barely positive at the end of the day.
XJO up today +0.3% on very light volume.
Here’s a Heiken-Ashi Chart for our XJO.
Well – that’s mostly in agreement. We’re (almost) bullish – we only have to see the AO (Awesome Oscillator) turn from dark to light – and we will really be bullish.
Market sentiment remains defensive this week. On three time frames (Daily – down, Weekly – indecisive, Monthly – bullish) the market is out of sync. The daily chart of the XJO might be on the verge of a move back to the upside. If that happens, the market will be back in sync (bullish). Watch.
- XJO Charts, Daily, Weekly, Monthly.
- Internals – Australian Market.
- Sector Watch
- Sector Momentum
- Sector Charts
- Summing Up.
XJO Charts, Daily, Weekly, Monthly
The long term trend is up. The short term trend is down, but may be on the cusp of a turn up. The most recent Heiken-Ashi candle has turned yellow, but has a long upper tail, and the Directional Movement Histogram has moved above the zero line. The chart has bounced nicely off the 49 Day MA. Wait for confirmation on the AO and the CCI to move above the 5-Day MA.
XJO down this week, -0.61%. This week’s H-A candle is a doji indicating that the medium term trend has may have changed.
CCI gives good divergence signals. It is currently showing a negative divergence. Wait for confirmation from the AO and Directional Movement Histogram.
Support is provided by the 13-Week EMA and then the 20-Week SMA. Any major pull-back (>5%) would likely be held by the support of the 49-Week EMA. That is also closely aligned with a major horizontal support level at 5556.
This is the third week in the month of April. One week to go.
Everything about this chart is bullish. The only negative is the current level of overhead resistance. That needs to be breached for the long term trend to remain up.
Currently the three trends (short, medium and long) are out of sync.
- Short term = Down
- Medium term = Indecisive
- Long term = Up
Something has to give. The short term trend is on the verge of a move to the upside. If that can be confirmed then the three trends should be back in sync, i.e., bullish. Wait.
INTERNALS – AUSTRALIAN MARKET.
XJO was down this week.
The number of stocks in the ASX100 above the 200-Day MA weakened from the previous week. The number of stocks above the 200-Day MA came in at 70%, compared to 76% the week before
The Number of stocks positive on the DMX Histogram fell from 69% to 60%. This is a short term trend indicator and can move more rapidly, week to week, than the long term indicator (stocks above the 200-Day MA).
Both measures remain above the 50% mark – so that remains bullish.
This section compares the performance of each sector against the XJO over a 20-Week period. It shows relativities not absolutes.
Here’s the previous week’s momentum chart (as at 7 April):
Here’s this week’s Sector Momentum Chart:
The top five momentum sectors are now all defensives (Health, Utilities, Gold Miners, Property and Consumer Staples.
The big resources sectors (Materials and Energy) remain on the negative side.
The XJO can continue to rise despite the improvement in the defensive sectors, so long as Financials X-Property (XXJ) continues to perform positively. It remains above the zero line, but only just.
SECTOR CHARTS (Daily)
XMJ was down this week -0.51%. But rose sharply on Friday. The most recent candle is a doji, so it might be ready to change short term direction from down to up. Wait for confirmation from indicators.
XMJ’s relative strength against the XJO peaked in late January. Mansfield Relative Strength has been below the zero line since late February, which indicates that the XMJ has been under-performing the XJO.
This is still one for the traders. Until the relative performance against the XJO improves its best left to the short-term swing traders.
The strongest momentum stock in XMJ is BSL but it is coming off a high and trending down. The next best are ILU, NST and NCM. ILU had a sharp improvement this week. Look to buy the dips on the two gold miners (NCM and NST).
XEJ is in a short term down trend. XEJ has had a strong rally starting in late March. It is back to the 49-Day MA so it may bounce here.
Indicators are all bearish. Wait.
The best stock is Origin Energy. It remains in an up-trend. If you must have a large-cap Energy stock it looks like the possibility. Buy the dips
3. XXJ Financials X-Property:
XXJ is in a short-term down-trend, which might be about to turn up. It is positive on the Directional Movement Histogram but needs confirmation from the CCI, AO and a bullish H-A candle.
You can see how the XXJ has been underperforming the XJO by looking at the bottom pane. It is now only just in the positive zone. A break lower and our market will be in trouble.
Challenger (CGF) remains the strongest momentum stock with a rating of 0.186. CGF is in a steady up trend. Buy-the-dips.
The four major banks remain on the positive side on the momentum chart, but none are particularly strong. Second tier banks and Macquarie are all now on the negative side. IAG, QBE and Suncorp all remain on the negative side. The only insurer showing strength is AMP.
XUJ is in a short term down trend, but may be on the verge of a move to the upside, most recent H-A candle is yellow, but has a long upper tail. That tail needs to disappear. It’s the second strongest momentum sector in our market (after Health). That doesn’t mean a lot, as it is a relatively small sector.
All AXS100 utility stocks are performing relatively well. Ausnet is the strongest with a momentum rating of 0.318 up from 0.244 the previous week. Most pay relatively solid dividends. e.g., APA 4.7%, Ausnet 5.2%, Duet 6.1%, SKI 6%. Ausnet is 100% franked, the others are un-franked.
XNJ has had a great run for the past month or so and is in an up-trend and out-performed the XJO.
The most recent H-A candle suggests the short term up trend could be changing. Watch for confirmation.
Aristocrat Leisure is the top momentum stock with a rating of 0.527. It has been a consistent top performer for many months. It is, however, a growth stock and pays poor dividends. Next best is TCL (momentum rating, 0.25), an infrastructure stock, which pays a dividend of 4.0% but low franking credits.
XSJ Consumer Staples
XSJ has been in a short term down trend since the end of March. For a couple of weeks I have been pointing out the 1-2-3 Push-Up pattern which is bearish. That’s working out nicely. It is now down to the 49-Day MA. It could bounce here. If it doesn’t, Consumer Staples is in trouble.
Three out of five large-cap stocks from the ASX100 are on the positive side in the Momentum chart, but none are especially strong. TWE is now the strongest stock in the sector. CCL took a big hit this week. forget about it for the foreseeable future. Not a lot appeals in the Consumer Staples sector, unless you want to get the dividends from Woolworths and Wesfarmers. Both are showing mildly positive momentum. Woolworths has an edge over Wesfarmers based on momentum strength. Dividend yield for WOW 3% with 100% franking. Wesfarmers pays 4.7% with 100% franking.
Health is in a solid long term up trend. Like most of the market this week it pulled back. Any pull-back is probably a “buy the dips” scenario. But this sector has two very different sets of stocks. The strong are very strong, and the weak are very weak.
CSL and COH are the strongest stocks with momentum ratings of 0.485 and 0.295 respectively.
No other stocks in the Health Sector look appealing.
XPJ has had a great run recently, but has hit a major resistance area and may fall back (which it did this week – just a little). CCI is showing a negative divergence, so more downside might be coming.
Any pull-back might find support at the 20-Day MA. Look for a bounce in that area.
Selective buying for dividends amongst the non-Retail Reits might be worth a look.
The strongest momentum stocks are now MGR (dividend of 4.4%), GMG (3% dividend)) LLC (dividend yield of 3.9%.)
XGD Gold Miners
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.
The large caps here are Newcrest and Northern Star Resources. Worth a look if you want to trade. Buy the dips.
XDJ – Consumer Discretionary.
XDJ has been in an up-trend since February this year and out-performing the XJO on this daily chart (bottom pane). This week it fell a little back to horizontal support and the 13-Day MA. It is showing a possible trend-change H-A Candle on Friday, so this pull-back could be over. Watch for confirmation.
Not too many stocks are doing well in this relatively large sector. Fairfax (FXJ) is the strongest of them (MOM 0.13). It fell this week -0.48% while the Sector rose – not a good sign. It is on a dividend yield of 3.9% with 70% franking. There are good reasons for avoiding Fairfax. Much speculation has been reported in the media that it could be a take-over target. If that speculation proves without foundation, the stock is likely to tank. This is one for the punters.
Next best is REA (MOM 0.115). It’s a growth stock with a dividend of 1.4%.
This is a dreary sight. Telecom is the weakest sector in our market.
The sector bounced this week off major horizontal support. You never know – this might be turn around time, but I’d want to see much more than this to encouragement me to buy these stocks.
Leave this sector alone until we see definite improvement.
With 70% of stocks in the ASX100 above their 200-Day MAs, this market remains bullish.
The following sector below its 200-Day MA is Telecom. Materials is still above its 200-Day MA but not by much. Two major stocks in that sector (BHP and FMG) are now below the 200-Day MA. Much more weakness in the sector and we can then classify XMJ as bearish.
On multiple time frames (Daily – short term, Weekly – medium term, Monthly – long term) the market is out of sync.
- Short term = Down
- Medium term = Indecisive
- Long term = Up
On the Daily Chart, the XJO is on the verge of an upside move. If that happens, it will pull the three time-frames back into sync. And we can climb on board once again.
Marker sentiment, however, is becoming more defensive with Property and Gold Miners now positive on the momentum charts. Market sentiment can change in the blink of an eye. So keep watch.While the general market sentiment is defensive, our market can continue to be bullish while Financials (X-Property) is still solid. It could be turning bearish when compared to the XJO. If that happens, we could see much more downside.