Weekly Wrap. Week ended 17/5/23. Budget Week.A solid week on the...

Weekly Wrap. Week ended 17/5/23. Budget Week.

A solid week on the XJO, up +0.84% helped on Wednesday by a mildly positive reaction to the budget and boosted on Thursday by a big rise in the U.S. Thursday's big rise was followed by a mini collapse on Friday.

Daily chart for the XJO.

Friday's fall of -0.85% took off about half of Thursday's big rise of +1.65%.

Friday's action is neatly bracketed by near-term horizontal support/resistance lines. A break out of those one way or the other might be indicative of further direction.

What's the betting that Monday will be neatly bracketed by Friday's action? Just to frustrate investors.

Meanwhile, he American market continues its strong up trend, but it could be petering out.

SP500

SP500 has had eleven closes in the zone between the +One Standard Deviation Band and the +2 Standard Deviation Band on the short-term Bollinger Bands (SMA12) shown on the above chart. That's the sign of a very strong up-trend.

That may be coming to an end as DZ Stochastic (a leading indicator) is close to a shor-term sell signal. That will kick in if DZ Stochastic crosses below its upper band.

Given the strength of this rally, I'd expect any pull-back to be bought and the up-trend to continue.

Sector Performance this week.

Seven sectors were up this week, and four down. The best two were Discretionary +3.23% and Materials +2.49%. No doubt that some of the rise in Materials was due to love in the Budget for Critical Minerals. But there were plenty of other international reasons for the rise in Materials (read miners). New Caledonia is in the throes of civil unrest, and New Caledonia is a major supplier of Nickel which may be disrupted. Copper is close to an all time high based on expected demand from China.

Artistocrat Leisure is big part of the Consumer Discretionary sector. The two biggest stocks in Discretionary and Wesfarmers and Aristocrat and they dwarf any other companies in the Sector. Aristocrat had a huge jump on Thursday +12.3% after their Trading Report which showed continued growth in their activities in the U.S. Investors also got an increased dividend.

So the two best sectors were largely up on international events rather than anything to do with the budget.

Only three sectors did better than the XJO this week

1. Discretionary +3.23% Bullish
2. Materials +2.49% Bullish
3. Staples +1.42% Bullish

T
he worst performer this week was Energy -3.59%. Energy is notoriously volatile. The previous week it was up +4.34% and on the basis of that rise I thought the down trend in Energy was ending - I got sucked in. Here's the daily chart for XEJ:

XEJ Daily

In my own defence, I did note that XEJ was at its 50-Day MA, and I said it might pause there. Well it did a bit more than pause - it retreated sharply from the 50-Day MA. 50-Day and 200-Day MAs are often critical support/resistance levels. Until XEJ develops a strong trend above the 200-Day MA (big black curved line) any trading in XEJ might best left to the swing traders.

Long-Term Investment Indicator

My Long-Term Investor Indicator is based on New Highs minus New Lows Cumulative. While the NH-NL CUM line remains above its 10-Day MA, the Long-
Term Investor can maintain their bullish positions.

This indicator, which is a lagging indicator, went bullish in mid-December and has remained bullish since then despite the recent pull-back. On only one day, so far, has NH-NLs shown a negative number, but the NH-NL Cum line remains above its 10-Day MA.

This indicator trends very strongly. When it does change direction from bullish to bearish, the change should be carefully noted. and action taken. It won't get you into and out of a long-term trend at the beginning and end of a trend, but it usually helps to get most of the action.

Picking a stock in the Energy Sector.

The Energy Sector is dominated by Woodside which was down for five days this week.

Another stock in Energy looking promising is, however Santos.

Santos.

Like Woodside, Santos was down every day this week, but that brings the stock back to the 200-Day MA. If it bounces here it may be a tradable stock. Short-term traders can look for a bounce off the 200-Day MA.

Copper

Above is a weekly chart for Copper.

Copper has been in a strong up trend since early February of this year. Prior to that Copper was in the doldrums for many months.

This week has seen a big rise on heavy volume. Weekly RSI is now above 80. That is looking like a "blow-off" top. There may not be a lot of upside left in the Copper rise.

Conclusion.

XJO had a strong week this week Discretionary and Materials leading the way. Those two sectors were largely impacted by international events although Materials was helped to a degree by Critical Minerals which got a boost in the Budget.

The American market has been in a very strong up trend which might be coming to an end. Any pull-back is likely to be bought.

The Australian market had a big pull-back on Friday. A move up or down from Friday's candle might indicate the next direction in the short-term for the XJO.

The long-term direction on NewHighs-NewLows Cumulative continues to be bullish. Stay with the trend until it ends.

Good luck.