Despite this week's strong rally the above three data sets are...

XJO up strongly this week. Is this a return of the Bull?

XJO Monthly Chart.

XJO has been in a down-trend since September, 2021 as indicated by the Hull MA 13 (blue dashes) and the reversal candle which occurred in September.

In January, the monthly chart gave a long-term sell signal on both the Supertrend (1.5/7) and the 8-Month EMA. January was brutal for the XJO. A long standing adage of stock market pundits is: As goes January, so goes the year.

Now, after the fourth week of March, the March candle is well above the 8-Month EMA but below the Supertrend.

We have four days of trading left in March. The 8 Month EMA is usually a reliable indicator of long term trend changes. I'd like to see confirmation by the Hull Moving Average changing to positive (yellow dashes instead of blue dashes). Let's be sure that March finishes bullish.

Weekly Chart.

XJO was positive this week, +1.53%, building on the previous week's +3.27%

The chart is unequivocally bullish. It has moved above the 8-Week EMA, Supertrend (1.5/7) has flipped to bullish and the Hull Moving Average has also flipped to bullish (yellow dashes)

Daily Chart.

In the past twelve days of trading, since 8 March, XJO has been up more than +6.5%.

This week it broke above the key moving average 200DMA and continued higher.

CCI is beginning to show some negative divergence, so a pull-back may be coming soon. A drop back to test the 200DMA and then bounce would be very bullish.

Sector changes this week.

Seven sectors were up this week, one flat and three negative.

Resources again dominated the Australian market this week, Materials +5.53% and Energy +5.13%. Utilities was the best performer, up +5.67%, but it is a relatively small sector and movements in XUJ are often related to movements in Energy. With Utilities and Energy both climbing higher, it's no wonder Australian families are feeling it in the hip pocket.

XXJ (Financials) was relatively flat this week, up just 0.1%.

Defensive sectors are seeing a shifty into risk-on sectors. Telecoms down -0.89%, Health down -2.53%. Consumer Staples +0.46%, although positive, was one of the weaker sectors this week. Defensive stocks such as Bear -2.04% and IAF (Composite Bonds) -1.28% complete a picture of switching out of defensives and into risk-on stocks.

New Highs - New Lows Cumulative.

NH-NL Cumulative this week is testing its 10-Day Moving Average. A positive cross-over appears to be imminent. This is a good indicator for long-term investors.

Strengthening in the NH-NL Cum is confirmed by my weekly Strong-Weak Stocks Cumulative chart. It has broken above its 5-Week Moving Average - bullish.

S-W Cum tends to act a little earlier than NH-NL Cum, but NH-NL Cum has an advantage in being compiled on daily data rather than weekly data. Watch for a break by the NH-NL line above its 10-Day MA.

Advances-Declines Cumulative.

A-D Cumulative has risen above both its 10-Day and 20-Day Moving Averages. That's a bullish development. That complements the view from the Weekly XJO chart - and confirms the bullish bias of our market.

Bonds versus Stocks.

At the end of the week, Stocks had a clear advantage over Bonds. That's consistent with the strong rally we've had the past two weeks.

This can act as a contrarian signal. If stocks are acting too strongly compared to bonds, we may see some change in the relativities between stocks and bonds. The ratio is now the highest it's been since November, 2021. It can, of course, go higher, but the higher it goes brings it closer to a reversal. Given the negative divergence on the CCI (see XJO Daily Chart above), we're getting clear messages that we could see a pull-back.

Stocks above key moving averages - last week and this week.

A look at the number of stocks in the ASX100 above key moving averages provides an idea of how bad/good things are.

1. Stocks above the 10-Day MA, last week 81%, this week 79%.
2. Stocks above the 50-Day MA, last week 59%, this week 53%.
3. Stocks above the 200-Day MA, last week 41%, this week 41%.

ASX100 stocks above 10-Day MA: Last week 81%. This week 79%.

ASX100 stocks above 50-Day MA: Last week 59%. This week 54%.

ASX100 stocks above the 200-Day MA: Last week 41%. This week 41%.

Despite this week's strong rally the above three data sets are stalling, with evidence of some dipping. That evidence is stronger when I look at data from stocks positive/negative on the Hull MA13. Last week, the number of stocks positive on the Hull MA 13 stood at 82%, this week 53%. So breadth seems to be narrowing.

Conclusion.

We've had two weeks of strong gains. The weekly and daily charts are unequivocally positive. Of course, if it's that positive we're likely to see a change in sentiment. That's already being signalled by contrarian indicators such as the CCI, Stocks/Bonds Ratio and short-term breadth measured by stocks above key moving averages. Contrarian signals should be taken as warning signals, watch market action for confirmation one way or the other.

Any pull-back is likely to be bought as the XJO is now above the 200-Day MA.

Good luck and good investing.