Sunday Smorgasbord. Weekly Report, week ending 27 May, 2016.

May 29, 2016 Comments off

CONTENT

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

AUSTRALIAN MARKET:  SECTOR PERFORMANCES IN THE PAST WEEK.

Screen Shot 2016-05-29 at 11.39.00 AM.png

On a close basis, XAO is up seven weeks in a row,  +1.01%.  But the closing high this week was only 6.1 points above the close of two weeks ago.  That’s a rise of just +0.1%.  Not much.  It looks like the market is running out of puff in this area.

Six weeks up in a row is not common.  Seven weeks in a row is pushing into rarified air.  Of course, the market can do anything it likes.  Eleven weeks up?  Yes possible.  Thirteen weeks up?  Yes possible.

Seven out of ten sectors were up.  The best performing sector was Info.Tech, +2.7%. Next strongest was Health +1.81%.   In Third Place was Energy, +1.52%.

The worst three sectors were: Consumer Staples -1.72%, Industrials -0.23% and Consumer Discretionary -0.0.3%.

Utilities and Composite Bonds (IAF) both underperformed XAO, which suggests that the Risk-On Phase remains intact.

This week 18 Stocks from the ASX100 made New 52-Week Highs.  The previous week fourteen  Stocks from the ASX100 made New 52-Week Highs, but this week is still well off the recent record of 29 New W-Hs set two weeks ago.  This confirms the idea that the market could be running out of puff.

No Stocks made 52-Week Lows.

78.6% of ASX100 Stocks are above their 200-Day Moving Averages.  That’s in the overbought area above 70 and close to the very overbought area above 80.  The ASX100 covers 74% of the stocks in the ASX.

79.6% of ASX100 Stocks were positive on the trend measurement indicator DPO.  that’s a marginal fall out of the very overbought area above 80% where this statistic sat for the previous two weeks.  So there’s a slight weakening of the market on this criterion.

Screen Shot 2016-05-29 at 11.58.54 AM.png

On a one-year basis, the strongest sectors are Health, Consumer Discretionary and Utilities.  Utilities and Industrials have been trading in and out of 3rd/4th over the past few weeks.  Look for trading opportunities in the strongest sectors and avoid the weakest sectors.  (There are always exceptions.  Recently some of the Materials stocks have been doing well – but the miners are still suspect.  (See below for more details.)

XJO:  Monthly, Weekly, Daily Charts.

Screen Shot 2016-05-29 at 12.14.51 PM.png

This long term chart continues to look positive.  We’ve now almost completed the month of May.  Technically the picture has improved.  The 3-Month MA is above the 10-Month MA.  That’s a bullish development.  Indicators are looking positive.  The Short-Term Stochastic (14.3.5) and CCI have both turned up.  CCI shows a positive divergence from the Index. A move by the CCI above zero would be bullish.  It is currently just below the zero line.  True Strength Index is just below zero but has turned up.  That’s another positive sign. If the Index is to fail, this is around the level, looking at the indicators, where it would occur.

Screen Shot 2016-05-29 at 12.20.00 PM.png

XJO up this week +1.02%. but printed an “inside” candle.  You can see on this chart that the high this week is virtually the same as the high two weeks ago.  That has come at the resistance of the Super Trend Line.  The short-term Stochastic (14,3,5) is overbought at 90.6.  A move below 80 would be a probable “sell” signal.  But the long-term Stochastic (50,10,10) has only recently lifted out of the over-sold region.  So we can expect a pull-back – but it will probably be bought.

Our market began a bear market in April 2015.  We now have signs that this bear market may be ending.  The chart is above the 50-Week MA and the down-trend line from April, 2015.  The chart shows a medium term up-trend with a higher low and a higher high.

The odds are beginning to stack up for a modest pull-back.

Screen Shot 2016-05-29 at 12.25.09 PM.png

This week, the daily chart remains convincingly above the 200-Day MA and the long term down trend line.  The market fell on Monday and Tuesday, but recovered on the last three days of the week.

The chart is in a solid up-trending channel.

 

The 20-Day MA seems to hold the short term key to this market.  It was broken to the downside on Tuesday, but rebounded strongly on Wednesday.  A convincing break of the 20-Day MA should result in more selling.

ASX 100 – STOCK RATINGS.

Momentum is one of those anomalies which throws doubt on the Random Walk Theory of Stock Markets.

As a general rule, avoid stocks in the weakest sectors, and look to stocks in the strongest sectors.   (There are always exceptions.)

The top ten momentum stocks as at the beginning of May with results for the month in order were:

Newcrest, (+0.74%) James Hardie (13.49%), AGL (2.02%), Treasury Wines (+11.8%), Vocus (8.92%), Cochlear (10.64%), Bluescope (-4.95%), Carsales.com (7.14%), Amcor (+6.43%) and Spark Infrastructure (11.11%).  On an even weighted basis, the ten stocks rose 3.93%.  STW, the tracking stock for XJO, rose by 3.58%.  That’s a significant advantage to the Ten Momentum stocks over the STW. 

Top Ten Momentum Stocks for the coming month are:

Newcrest, Aristocrat Leisure, Treasury Wines, James Hardie, TPM, Vocus, Cochlear, AGL, DMP, CGF.  Six of these stocks are retained from May.

The following charts show the stocks from the ASX100 in each of the ten sectors.  I’ve simplified the Relative Strength Charts so that only one bar is used to indicate strength of the stocks in each sector.  Use technical analysis for entry to these stocks.

Utilities.  

Screen Shot 2016-05-29 at 1.39.16 PM.png

Utilities continues to be one of the better performing Sectors.  The stand-out is AGL.  With a Relative Strength of 0.64, it is one of the best performing stocks in the ASX100.  On current prices, AGL pays a dividend of 3.5%.   AST pays a handy dividend of 5.5%.  Spark Infrastructure pays 5.2% while APA pays 4.5%.  Utility stocks generally pay good dividends.

Industrials:

Screen Shot 2016-05-29 at 1.46.27 PM.png

The Industrials Sector is home to some of the better performing stocks on the ASX100.  Aristocrat is the standout here and one of the best performing ASX100 stocks over the past month.   Asciano, Aristocrat, Transurban, Sydney Airports and Brambles are all performing well.  Two Stocks (Aristocrat and Cimic) made 52-Week Highs this week. TCL (Transurban) pays a solid dividend of 3.6%.  Sydney Airports also pays a solid dividend of 3.8%.

Materials:

Screen Shot 2016-05-29 at 1.49.48 PM.png

Materials is on the negative side of the ledger.  But this is a mixed bag.  In general, avoid the miners.  Newcrest,the Gold Miner, however, is by far the best of them.  James Hardie and Bluescope are both building materials producers. Amcor, the packaging company, has picked up in the ratings.    Stocks in this sector making new 52-Week Highs were: Adelaide Brighton (ABC), Amcor (AMC), James Hardie (JHX), Boral (BLD) and Orora (ORA).  On current pricing, Amcor pays a reasonable dividend of 3.2%.  ABC pays 4%, ORA pays 3%.

Financials X-Property:

Screen Shot 2016-05-29 at 1.55.07 PM.png

XXJ is one of the worst performing sectors on a one year basis.  The four big banks are all on the negative side of the ledger.  Forget about the big banks until we see some solid improvement.

CGF is clearly the best performing stock and pays a dividend of 3.3%.  CGF is a fund manager. No stocks made 52-Week Highs.  IAG, MFG and MPL are both performing well relative to most in this sector.  IAG pays 5.7%.  MFG pays 3.1%.

Health and Information Technology:

Screen Shot 2016-05-29 at 1.59.08 PM.png

Health is the best performing Index and has solid performers like Cochlear, CSL and Sonic Health.  Sonic Health Care is on a dividend yield of +3.3%.

Four stocks from the Health Sector made 52-Week Highs this week:  COH, CSL, HSO and RHC.

Carsales.com (CAR) is clearly a standout in Info.Tech.  Dividend Yield 2.8%.

Consumer Staples:

Screen Shot 2016-05-29 at 2.04.03 PM.png

TWE is one of the best performers in the ASX100.  It has a dividend yield of 1.5%, so it is clearly a growth stock.  This week it made a new 52-Week High.

Wesfarmers had a big set-back this week after poorly received news about Target.  It bounced strongly, however, on Friday, +1.91%.  The poor performance over the week (-3.94%) cut its premium over Woolworths.  WES, however, is still the pick of the two big retailers, if you must have one in your portfolio.   Wesfarmers yield is 4.9%.  Woolworths remains in a long-term downtrend. Avoid until a new uptrend becomes clear.

Consumer Discretionary and Telecomms.

Screen Shot 2016-05-29 at 2.09.24 PM.png

Only one stock in XDJ made new 52-Week High this week:  Rea Group (REA).   Other solid performers are Navitas, JBH, and Star Entertainment.  Of these, only NVT and JBH pay enticing dividends.  NVT  pays a dividend of 3.6%.  JBH pays 4%.  None of the other good performers are of interest to dividend hunters.

Telecomms are interesting.  Telstra remains enticing to the dividend hunter:  dividend +5.4%.  TPM and Vocus have been very good performers and are both Ten Ten Stocks.

Energy.

Screen Shot 2016-05-29 at 2.14.37 PM.png

On a one-year basis, Energy is a dreary sight.  It is, however, in a gently sloping up trend.  While it remains in its up trend channel, there is still some hope for it.  But I think there are better options elsewhere.

Australian Market.  Risk-On or Risk-Off.

Screen Shot 2016-05-29 at 2.17.39 PM.png

When Bonds under-perform Stocks, it’s Risk-On.  I use two ETFs to represent these two parts of the market.  For Bonds I use IAF, which is a composite bond fund.  For the Stocks, I use STW, the ETF for XJO.  The ratio of the two is shown in the chart above.  When Bonds under-perform, the chart falls.  When Bonds out-perform, the chart rises.

The Chart on Tuesday made a temporary foray into Risk-Off territory (above the 20-Day MA) but quickly reversed.  Currently this indicator is still suggesting the market is Risk-On, but maybe Tuesday was a portent.

AMERICAN MARKET.

This week SP500 was positive, up +2.28%.

The potential Head/n/Shoulders formation we’ve been watched was dispatched to the dust-bin this week.

The bearish 20MA cross below the 50MA has also been dispatched with this week’s strong rally.

SP500 currently in a narrow trading range close to the top of a longer term wide trading range.  Short term support lies at 2040 and resistance at 2100.  Major horizontal, long term support is around 1850 (round figures).  Stochastic is overbought and MFI is showing a potential negative divergence.  So, we’ll probably see more range trading.  America is on holidays on Monday.

Screen Shot 2016-05-29 at 2.21.58 PM.png

 

 

 

Summing up:

The Australian market is up for the seventh week in a row this week, XJO +1.02%.  That’s starting to push to the limits of usual uptrends.  But, anything can happen on the market.

This week the leading sectors were Info.Tech.,Health and Energy.  Seven out of ten sectors were up.  This week’s laggards:  Consumer Staples, Industrials and Consumer Discretionary.

This week, 18 Stocks in the ASX100 made new 52-Week Highs.  No stocks made new 52-Week Lows.

The Australian Bond/Stocks Ratio has a mild Risk-On reading.  A break back above the 20-Day MA would signal a possible change to Risk-Off.

The American market remains in a short term trading range:  2040-2100.

The best sectors on a one-year basis are Health, Consumer Discretionary and Utilities..  Look to those sectors for possible trading opportunities.

The results for the TopTen Momentum stocks for May were:

Newcrest, (+0.74%) James Hardie (13.49%), AGL (2.02%), Treasury Wines (+11.8%), Vocus (8.92%), Cochlear (10.64%), Bluescope (-4.95%), Carsales.com (7.14%), Amcor (+6.43%) and Spark Infrastructure (11.11%).  

On an even weighted basis, the ten stocks rose 3.93%.  STW, the tracking stock for XJO, rose by 3.58%.  That’s a significant advantage to the Ten Momentum stocks over the STW. 

For the next month six of the above stocks remain in the Top Ten.  The Top Ten for the next month are:

Newcrest, Aristocrat Leisure, Treasury Wines, James Hardie, TPM, Vocus, Cochlear, AGL, DMP, CGF.

When the market is this extended its best to wait for better opportunities before sticking your hard earned into the market.

RB

Categories: Uncategorized

Saturday Morning Joe. 28 May, 2016.

May 28, 2016 Comments off

In America:

Screen Shot 2016-05-28 at 10.00.45 AM.png

Dow Jones +0.25%, SP500 +0.43%, Nasdaq +0.65%, NY Composite +0.29%, Russell 2000 +0.94%.

Fed Head, Janet Yellen, spoke on Friday.  Initial reaction of the market was to yo-yo.  But eventually it decided everything was OK, and finished at highs for the day (or close to them).

NYSE NewHigh/NewLow Ratio  is bullish at 89.8%.  New Lows are benign at 10.

5-Day TRIN (a measure of breadth) for the Nasdaq has reached a low point of 3.68.  That represents a very overbought reading.  Anything below four is overbought.  This is the third day in a row that Nasdaq 5-TRIN has been below 4.

SP500 Chart:

Screen Shot 2016-05-28 at 10.11.03 AM.png

The Index is close to horizontal resistance. But the Super Trend Line has flipped from blue to yellow – positive.  Short-Term Stochastic is overbought but not yet showing a -ve divergence which usually precedes a fall.  A large positive divergence could be developing on the MFI.

The Index is in a small trading range 2040 and 2100.  That is close to the top of a much larger, longer term trading range.

Volume has been dropping off in the current rise.  This is not a strong signal, so we’ll probably see more range trading.

Commodities:

Screen Shot 2016-05-28 at 11.06.22 AM.png

US$ rose, +0.57% but that didn’t affect commodities negatively except for GLD -0.81%.  The inverse correlation between Gold and the $ can be clearly seen in the two charts above.   DBC +0.41%.  Base Metals +0.97%.  Energy +0.18%.  Ozzie Dollar down +0.52% to finish at 71.87.

Yesterday, in Australia, the XJO was up +0.33%.  Here’s the chart for STW, tracking ETF for the XJO:

Screen Shot 2016-05-28 at 11.15.36 AM.png

STW broke above horizontal resistance, but it wasn’t a convincing break.  The long upper shadow suggests intra-day selling.

Monday is a holiday in America.  Australia often shows some strange behaviour when America has a holiday.  Probably we’ll see another narrow range day not going anywhere decisively.

Full weekly report tomorrow.

RB

Categories: Uncategorized

Friday Morning Joe. 27 May, 2016.

May 27, 2016 Comments off

In America:

Screen Shot 2016-05-27 at 9.39.49 AM.png

Dow Jones -0.13%, SP500 -0.02%, Nasdaq +0.14%, NY Composite -0.07%, Russell 2000 -0.11%. America last night suffered from an attack of the “go-slows”  Trading was very choppy.  After two days of strong upward movement and a speech by the Fed Head scheduled for Friday, the narrow range today is not unexpected.

NYSE NewHigh/NewLow Ratio  is bullish at 87.5%.  New Lows are benign at 12.

5-Day TRIN (a measure of breadth) for the Nasdaq has reached a low point of 3.69.  That represents a very overbought reading.  Anything below four is overbought.

SP500 Chart:

Screen Shot 2016-05-27 at 9.52.36 AM.png

The Index is close to horizontal resistance and the Super Trend Line.  Short-Term Stochastic is overbought but no other indicators are flashing amber.  It looks like the reaction to Janet Yellen’s speech will be a catalyst one way or the other.

Commodities:

Screen Shot 2016-05-27 at 9.57.12 AM.png

US$ fell a little, -0.16% but intra-day buying was evident.  Most of the commodities reacted negatively to the intra-day buying in the %.   DBC -0.07%, GLD -0.34%. Base Metals +0.98%.  Energy -0.34%.  Ozzie Dollar plus +0.4% to finish at 72.25.  Iron Ore finished below 50.00 but I don’t have the actual figure.

I can’t see much either way in this for Australia today, so the recent consolidation will probably continue.

 

RB

Categories: Uncategorized

Thursday Evening Liqueurs. 26 May, 2016.

May 26, 2016 Comments off

Today was a modestly up day for the XJO (+0.29%) after being well down early in the session.  Technically, nothing much has changed.

Here’s the Chart for STW, tracking ETF for the XJO:

Screen Shot 2016-05-26 at 9.44.25 PM.png

The Index remains within its sideways consolidation.  These generally break in the direction of the prevailing trend, i.e., upwards.  But there are no guarantees.  Wait for the break either up or down.

The Bollinger Bands on the Long Term Stochastic (50.10.10) are as tight as they can be.  That usually means that the next break will be sharp and violent, either up or down.

Life may become interesting.  Are you ready for it?

Screen Shot 2016-05-26 at 10.13.12 PM.png

RB.

Categories: Uncategorized

Thursday Morning Joe. 26 May, 2016.

May 26, 2016 Comments off

In America:

Screen Shot 2016-05-26 at 8.51.00 AM.png

Dow Jones +0.82%, SP500 +0.7%, Nasdaq +0.7%, NY Composite +0.9%, Russell 2000 +0.5%. Europe was up strongly last night (DAX +1.47%) and America followed up for the first hour then chopped sideways to the finish.

NYSE NewHigh/NewLow Ratio  is bullish at 91.2%.  New Lows are benign at 10

SP500 Chart:

Screen Shot 2016-05-26 at 9.06.37 AM.png

Tuesday’s strong rally saw follow-through buying last night.  The Index is probably got one more up day before encountering major horizontal resistance and resistance of the Super Trend Line.  That will test the resolve of the market.  Indicators are still moving up.  CCI is at 166.7.  That’s close to the highest readings for the year.  We might need to see negative divergences on CCI and Short Term Stochastic (14.3.5) before we see a pull-back.  I’m still expecting this rally to be short lived.

Commodities:

Screen Shot 2016-05-26 at 9.12.09 AM.png

US$ fell, -0.28%.  That helped most of the Commodities (DBC +1.17%), but not GLD -0.27%.  Gold is oversold with an RSI of 36.7.  It is now into a congestion zone.  There could be some more downside, but not much, before we see a relief rally.   Base Metals +0.16%.  Energy +1.06%.  Ozzie Dollar plus +0.16% to finish at 71.96.  Iron Ore finished at 50.00 down -0.4%

Australian stocks in NY:

Screen Shot 2016-05-26 at 9.19.21 AM.png

BHP +4.28%, Rio +3%, Westpac +1.01%, ANZ +1.41%, Woodside +2.15%.

Sell in May?  Not this year.  Maybe June?

 

RB

Categories: Uncategorized

Wednesday Evening Liqueurs. 25 May, 2016.

May 25, 2016 Comments off

Well, I had a feeling in loins yesterday that the downside break on the XJO wasn’t all that convincing.  Just too small and not enough volume.  Then ……. today …….. whooshka.  XJO up gazillions.  Well  ….. actually ….. +1.45%.  Not gazillions – but nice.

Here’s the chart for STW, ETF for the XJO:

Screen Shot 2016-05-25 at 10.08.19 PM.png

Looking at the chart, however, not a lot has changed despite today’s dramatic upside move.  Yesterday saw a minor break of downside support, but today’s move puts the chart back into its sideways consolidation.  Until overhead resistance is broken to the upside, we’ve still in no-man’s land.

RB.

Categories: Uncategorized

Wednesday Morning Joe. 25 May, 2016.

May 25, 2016 Comments off

In America:

Screen Shot 2016-05-25 at 9.00.46 AM.png

Dow Jones +1.22%, SP500 +1.37%, Nasdaq +2%, NY Composite +1.24%, Russell 2000 +2.15%. RSIs on all indices are back into bullish territory above 50.   That looks like a game-changer for the short term trend.

NYSE NewHigh/NewLow Ratio  is back above 80% at 85.5%.  That’s a bullish reading. Nasdaq at 68.8 continues to improve.  That’s a sharp improvement from Thursday’s reading of 17.4%.

SP500 Chart:

Screen Shot 2016-05-25 at 9.18.00 AM.png

Last night’s strong rally had the index crossing above both the oblique down trend line and a minor horizontal resistance level.  That’s bullish.  A test of the recent highs seems highly probable.  I still expect this rally to be sold into.

Commodities:

Screen Shot 2016-05-25 at 9.22.31 AM.png

US$ continued its upside rally, +0.32%.  DBC flat  +0.00%, Energy +0.49%.  Base Metals flat +0.08%.  GLD down -1.73%.    Ozzie Dollar down -0.55% to finish at 71.85.  Iron Ore finished at 50.20 down -4.7%

Australian stocks in NY:

Screen Shot 2016-05-25 at 9.28.00 AM.png

BHP +0.56%, Rio +1.06%, Westpac +1.02%, ANZ +0.03%, Woodside -0.03%.

 

RB

Categories: Uncategorized
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