Short Term Trading Weekend Lounge: 16 -18 Sept, page-57

Weekly Report

As expected, the XJO pulled back this week.

The daily and weekly charts remain out of sync.  

Action on Thursday and Friday on the daily chart with two doji candlesticks holds the potential for upside movement, but until we see positive results it is best to wait.

Last week XJO and especially the Financials Sector faced serious head-winds as ANZ, WBC and Macquarie all went ex-dividend.  It would have taken an extremely bullish market to push XXJ into positive territory – the week was very bearish.

At this stage, all Sectors have been given bearish ratings, with only one (XIJ) showing the potential for a bullish change.  That’s a depressing result – but these can switch in the blink of an eye.

• XJO Charts, Daily, Weekly, Monthly.
• Internals – Australian Market.
• Copper
• Sector Charts.

XJO Charts, Daily, Weekly.

XJO Daily (Heiken-Ashi Chart):

XJO has moved from the lower supporting line of the Standard Error Channel back up Last week, XJO was at the top restraining line of the Standard Error Channel where reversals typically occur.  This week was no exception.  Friday’s inside candle on the Heiken-Ashi chart holds the potentional of an upside move.  That’s no certainty – look for a bullish candle in the next couple of days.

On the negative side, the short-term Stochastic (14.7.3) has only just crossed over negatively.  We might have to wait for a positive x-over.

XJO Weekly (Heiken-Ashi Chart):

XJO down -3.23% this week.

The weekly XJO chart is out of sync with the daily chart.  While the daily chart is still bearish, the weekly chart has the potential for a bullish reversal.  That’s seen in this week’s long-legged doji candle.  

The short-term Stochastic has turned up from a bearish position and back inside the lower Bollinger Band.  That’s another potential bullish signal

I’d like to see both daily and weekly charts in sync before being bullish in the medium term.

XJO Monthly:

The recent candles on the monthly H-A chart for the XJO are bearish.  That takes place within the very long-term trend which is to the upside.  

We are only two weeks into November, so not a lot can be read into this chart.

Both the short-term Stochastic and RSI remain on sell signals after the devastation caused in October when the XJO was down -6.08%, its worst performance since August 2015.

The very long-term trend remains up.

INTERNALS – AUSTRALIAN MARKET.

Internals remain weak.

The number of stocks in the ASX100 that are above their 200-Day MA fell from 32% the previous week to 28% this week.  That is still a bearish reading

Percent of ASX100 Stocks positive on the Directional Movement Index fell from 42% to 25%.  That remains a bearish number.

The % of ASX Stocks above their 50-Day EMA fell from 38% to 16%, bearish.

We need to see more improvement in the internals before being confident that the market has turned around.   In the chart below, the blue line shows the number of stocks above the 200-Day EMA. That needs to rise above the 50% line.

In the chart below, when Series Two and Series Three are above Series one, a chance exists that the current bearish trend is over.  Once again, Series Two and Series Three are below Series one.

Only one sector out of eleven was positive this week.   That was XUJ (Utilities) which is a defensive sector, up +1.53%.  Worst was XXJ (Financials) down -4.66%, but that was impacted by three big banks going ex-dividend.  ANZ was down -6.52% this week.  NAB down -4.54%.  Westpac -8.77%.  The recent rotation into Financials can now be seen as an effort by sophisticated investors to dividend strip those stocks.   

Copper Futures:

Copper rose this week -4.25%.  It remains in a consolidation pattern but close to a break-out.

The Accumulation/Distribution Index suggests that this commodity is under consistent accumulation.  A break-out could see a rapid rise to the upside.  Watch.

SECTOR CHARTS

XMJ (bearish):

XMJ was down this week, -3.1%.  

Friday’s inside-day candle on the Heiken-Ashi chart suggests the possibility of an upside rally.

Metals prices on Friday in America suggest we will see an upside rally in Ozzie miners.  Base Metals +1.82% and Gold +0.74%.  

XMJ has some very strong stocks, e.g., EVN, FMG, ORI, RIO.  Look to these for opportunities

It also has some very weak ones, mainly in the building area, e.g., BLD, CSR, JHX, BSL. Avoid these until we see clear evidence of a turn-around.

XEJ (bearish):

XEJ is in a medium-term down-trend.  Down this week -2.25%.  

This chart shows the potential for an upside move:  squeeze on the Stochastic Bollinger Bands and a narrow range doji on the Heiken-Ashi chart on Friday.

Energy in the U.S. is now extremely oversold and had a positive session on Friday, +0.94%.  U.S. Energy is extremely oversold and due for at least a counter-trend rally

No stocks appeal in the XEJ at this stage.

XIJ (bearish with the possibility of a positive trend change):

XIJ was down this week, -1.84%.  TheIndex is sitting just above its 200-Day EMA.  This has the potential for an upside move this week.

CPU and LNK are the two strongest stocks, but other opportunities elsewhere appeal more.  

XXJ (bearish):

XXJ had a poor week, down -4.66%.  It would have taken something of a miracle of XXJ to be up this week with ANZ, WBC and MQG all going ex-dividend.  

XXJ is now close to support, so something of a counter-trend rally is possible in the coming week.

The strongest stocks are QBE and ASX, neither of which will be hit in the near-future by ex-dividend events.

XUJ  (bearish):

XUJ (Utilities) was the only sector positive this week, +1.53% but remains in a long-term down-trend.

Ausnet looks to be the best opportunity in this Sector.

XDJ  (bearish):

XDJ had a negative week -1.83%.  Any bounce is likely to be a counter-trend rally.

This sector contains some of the most shorted stocks on the ASX, e.g., JBH, DMP, BWX,  GEM, NEC, HVN, MYR, GXL, SUL, FLT.  That’s a third of the 30 most shorted stocks on the ASX.  No wonder the Sector is in a downtrend.

No stocks in this sector have appeal.

XHJ (bearish):

XHJ down -3.69% after a very strong week the previous week.  This is the second time it has failed at overhead resistance and pulled back below its 200-Day EMA.

HSO is the strongest stock but subject to take-over action.  Leave that to the experts.

Nothing else appeals at this stage.

XNJ (bearish):

XNJ fell this week, -1.45% and negated the previous head/n/shoulders pattern. It remains below its 200-Day EMA, and the 50-Day EMA is below the 200-Day EMA.  This is a bearish configuration.  Any rally is likely to be a counter-trend rally.

Strongest stock are in transport related industries:  TCL, AZJ, QUB and QAN.  QUB is the only one of these stocks to be above its 200-Day EMA and has the most appeal.

XSJ (bearish).

XSJ fell -3.79% this week.  In the previous week, XSJ rose above its 200-Day EMA but then failed at the first line of horizontal resistance.

The significant development in this sector has been the out-performance of Woolworths compared to Wesfarmers.  CCL is, however, now outperforming WOW.

XTJ (bearish):

XTJ fell -1.52% for the week.  On a relative basis it has been deteriorating slowly since late August.  This may be hiding some stealthy accumulation.  Watch

XTJ consists of only two large-cap stocks, Telstra and TPG.  At this stage neither is enticing, but both deserve watching.

XPJ (bearish):

XPJ up this week, +3.2%.  It remains within a wide trading range.  Until it can hold above the 200-DayEMA leave this for range traders.

GPT and VCX look the best of the Property stocks.