26/2/23. Weekend Report - The Week That Was. Week Ended...

26/2/23. Weekend Report - The Week That Was. Week Ended 24/2/23.

XJO Monthly Chart.

After almost four weeks, XJO down so far -2.27% after stalling at the top of the strong January candle. XJO has also reached a zone where it has failed in the past.

So far, the Index is above the 8-MEMA, Hull MA13, 50-MMA, 200MMA, Supertrend (7/1.5). Not much damage done yet.

Monthly RSI is at 54.68. 50 represents the dividing line between bullish and bearish.

XJO Weekly Chart.

XJO remains in an up-trend, with higher highs and higher lows. In the past five days, XJO fallen -0.54%.

XJO began to fall three weeks ago at a major resistance level.

8-Week EMA and Hull MA13 turned turned down, which is bearish. Supertrend is providing support at this moment. Events overnight in America could see a break to the downside of Supertrend.

Weekly RSI is at 55.2 - bullish but falling.

CCI remains above its zero line (but falling). It's been above its zero line since 24 Oct. 2022. That marked the start of this bull market.

XJO Daily Chart.

XJO was in a strong up-trend in January. It is currently in a short-term down-trend.

Daily RSI has fallen below its mid-line of 50. That's bearish

XJO may be finding support at the 50-Day MA. As stated previously, events on Friday in America could see a decisive break below that support level.

Weekly Changes in Sectors.

Despite the fall in the XJO this week of -0.54%, breadth was quite healthy. Only two sectors fell this week, XMJ (Materials) -2.96% and XDJ (Discretionary) -1.23%. XSJ (Staples) was flat, +0.09%

A couple of sectors showed quite healthy gains, XUJ (Utilities) +6.05% and XPJ (Property) also +6.05%.

The damage to the XJO was mainly done by XMJ (Materials) after both BHP and RIO presented gloomy reports to the market. That's largely a result of events in China, where the country was in lock-down for the second half of 2022 - the time covered by the reports from BHP and Rio. (The biggest markets for those two countries are in China.)

Monthly, Weekly and Daily RSIs. - Sectors + XJO + Gold + Composite Bonds.

This week's chart:

Each sector has three bars representing the RSI on Monthly, Weekly and Daily bases.

The following is a rough guide to interpreting the chart.

Bullish: Rising bars.

Bearish: Falling bars.

Counter trend rally: Falling then rising.

Pull-back: Rising then falling.

Bullish Sectors: XIJ, XNJ.

Bearish Sectors: XXJ, XMJ, XEJ.

Counter trend Rally: XUJ, XPJ.

Pull-back: XDJ, XTJ, XHJ, XSJ.

XJO is in pull-back mode. Composite Bonds (IAF) and Gold (XGD) are also in pull-back mode.

NewHighs-NewLows.

This is a long-term indicator, but a good guide for long-term investors.

NH-NL have been pulling back since the end of January. That's a warning sign to long-term investors to stay defensive,

Stocks v Bonds. Relative performance.

On a relative basis, Bonds are currently outperforming Stocks, i.e., the chart is below the zero level.

This is a reasonable picture of bullish and bearish status of the market. It's probably a good idea to remain bearish on stocks while this chart remains below zero.

% of Stocks above key moving averages.

1. % of stocks above 10-Day Moving Average: Last Week 42%, This Week 44%.

2. % of stocks above 50-Day Moving Average, Last Week 61%, This Week 56%.

3. % of stocks above 200-Day Moving Average, Last Week 70%, This Week 65%.

In the short-term, breadth, as measured by stocks above the 10-Day MA, improved a little this week as indicated by the Sector changes shown above.

The longer term measures remain above the 50% mark. So the market is not in bad shape.

SP500.

I mentioned early in this report, the poor results in America on Friday. Here's the SP500 chart.

SP500 began a steep decline six days ago and has fallen five of the past six days. Friday saw a fall of >1%. That could result in a follow-on fall in the XJO on Monday.

But a lot of strange things are happening in this chart. Three of the candles show "hang-man" candles. A small body at the top of the candle and a very long lower wick. That indicates plenty of intra-day buying.

Although the bears have been dominant in the past six days, bulls have been fighting good rear-guard actions on three of the days, pushing back against the bulls.

The chart is now down to a crucial level. It bounced strongly off the 200-Day MA on Friday despite the initial big fall. Such action could spell the end of this push down by the bears. We need to see a big upside candle on the SP500 on Monday to be confident that this fall is over - at least in the short-term.

It would be very interesting on Monday if the XJO pre-empts the SP500 by rising, or at least showing good strength in intra-day trading

Conclusion.

February has been a poor month for the XJO. Although the past week showed a net loss for the XJO, internal strength wasn't nearly as pessimistic as suggested by the -0.54% fall in the XJO.

The long-term trend for the XJO is still bullish with higher highs and higher lows.

Markets here and in the U.S. are now at a crucial stage. Watch carefully for events on Monday.