10/07 Indices, page-179

Bulls were victorious over Bears this week as the XJO rose more this week than in any time in the past year. The bullish rally was stoked by an impressive (low) inflation report out of the U.S. (Good news was good news.) U.S. market started to tip over on Friday night, so we might be in line for a pull-back.

XJO Daily Chart.

On Friday, XJO poked above horizontal resistance and is into a low volume zone. Any pull-back is likely to be bought as plenty of support now exists nearby.

The chart also finished above the Kumo Cloud which puts the XJO into bullish territory. If a pull-back receives support at the top of the Kumo Cloud, that should spark another bullish rally.

The Index finished up +3.71% for the week.

SP500.

The SPX has been much stronger than the Ozzie XJO. Spx is way above its the Kumo Cloud. That in itself suggests we migh see a pull-back. RSI for SPX is now sitting on 70. That's overbought, so another reason for thinking we might see a pull-back. SPX was down marginally on Friday night -1.0%

SPX is in a low volume zone with plenty of nearby support. Any pull-back is likely to be bought.

Sector Performance this past week.

This shows just how strong our market was this week. The only weak link was XHJ (Health) down -0.37%

XMJ (Materials) was the best performing sector, up +6.73% followed by XPJ (Property) +5.17% and Energy +5.12%. XGD (Gold Miners) which is an industry group within XMJ was up a massive +9.84%.

Defensive Sectors were the relative weakest, XHJ -0.37%, XSJ (Staples) +0.86%, and XUJ (Utilities) +1.9%.

52-Day Mansfield Relative Strength.

The best performing Sectors over the past 52 Days have been XIJ (Information Technology), XEJ (Energy), and XMJ (Materials). Look to strong stocks in those sectors for trading options.

Adrenalin junkies might look to Gold Miners for trades - you must be competent in Technical Analysis to trade the Gold Mining stocks. XGD is consistently an out-performer but can be very volatile - not for the faint hearted.

NewHighs-NewLows Cumulative.

NH-NL Cum peaked in early May and fell until the beginning of July. It then moved above its 10-Day MA and gave a buy signal. It had a bullish kick above its 10-Day MA this week and continues to be bullish. This is a good long-term indicator for investors rather than traders.

%100 Leader Stocks above 200/50/10 Day Moving Averages.

% of Stocks above the 200-Day MA: Last week 47%, this week 61%.

% of Stocks above the 50-Day MA: Last week 26%, this week 67%.

% of Stocks above the 10-Day MA: Last week 17%, this week 81%. That's the best since mid-April this year. Another reason for thinking that our market is overbought and ready for a pull-back to take some of the heat out of the market.

Conclusion.

This has been a very strong week for the XJO - so strong, we'll likely see a pull-back or consolidation. That might provide an opportunity to buy into this rally if you've been sitting on the sidelines.

Good Luck.

That's all for this week - stay safe.