26/12 Indices, page-86

1/1/23. Weekend Report - The Week That Was. Week Ended 30/12/22.

Chart Analysis on this Blog is purely descriptive. It is written for informational and educational purposes and should not be taken as financial advice. Do your own research or seek advice from a Registered Financial Advisor.

ASX was down for the fourth week in a row - not a great December, historically the best month of the year.

XJO Monthly Chart.

The month of December has been poor for the XJO, down -3.37%. For the whole of 2022, XJO down -5.45%. That's tolerable for the long term investor.

The Hull MA13 and the 8-Month EMA Have both turned up. That's significant. Remember that Hull MA13 was the first indicator to turn bearish back in October 2021.

The chart in December was knocking on resistance of the Supertrend (7/1.5). That caused the Index some problems.

XJO Quarterly Chart.

Despite the poor results in December, the fourth Quarter of 2022 did well, up +8.72%. That enabled the XJO to recover about half the losses experienced in the two middle quarters of the year.

XJO Weekly Chart.

In the past five days, XJO has fallen -0.97%.

8-Week EMA and Hull MA13 has now turned down.

XJO is now down to support of the 50-WMA and Supertrend (7/1.5)

The next few days may be crucial. Either support holds, or XJO crashes to the down-side with the next support level around 6800. XJO is currently at about 7000 (round figures).

XJO Daily Chart.

This chart emphasises the importance of the next few days. XJO is now back to the 200-Day MA. That's usually taken as the demarcation between bull and bear markets. If XJO bounces here - the bull is still alive and kicking. A fall through the 200-Day MA, and the bears will be cheering - it will also negate the Golden Cross (50-DMA crossing above the 200-DMA). The 200-DMA is a powerful support/resistance level. Continue to watch

ASX Sector Results for this week.

All eleven sectors were down this week. XIJ was the best and only just down, -0.02%. XDJ, which has been doing poorly in recent weeks, was relatively resilient, down -0.19%

XEJ (Energy) -1.64% and XPJ (Property) -1.69% were the two worst performers. Because of international factors, XEJ tends to jump around a lot. The next section of this report is a better guide to the fortunes of XEJ.

Relative Strength of Sectors.

RSI (Relative Strength Index) is calculated using the default setting of 14 days - almost three weeks of trading. It provides a more reliable guide to changes in sectors than the one-week results which can jerk around quite a lot and, thus, RSI is probably a better guide to recent strength in the sectors. (Click here for a description of RSI.)

Ten out of eleven sectors have now fallen below the 50 RSI level. The worst is Discretionary with an RSI of 35.32. That makes it oversold, and, as we saw above, XDJ has been relatively resilient in the past week.

The only sector above the mid-line (50) is XUJ (Utilities ) 53.6. Next best are XMJ (Materials) 48.91 and XEJ (Energy) 46. Resources remain the place to be.

XJO below 50. That's into bearish territory.

NewHighs-NewLows Cumulative.

Early this month, NH-NL Cum briefly rose above the 10-Day MA but now continues to fall below its 10-Day MA.

This is a lagging indicator but bullish signals are usually highly reliable. At this stage, this chart is suggesting that long-term investors stay away from this market.

I've developed another long-term metric - StrongStocks-WeakStocks which is similar to NH-NL but gives signals a little earlier than NH-NL.SS-WS is up for the seventh week in a row and has moved well above its 5-Week MA. This week there were 7 Strong Stocks and 7 Weak Stocks. That's flat.

The 5-Week MA is now close to the SS-SW line. A weak reading next week would provide a sell signal.

% of Stocks above key moving averages.

1. % of stocks above 10-Day Moving Average: Last Week 36%, This Week 35%.

2. % of stocks above 50-Day Moving Average, Last Week 57%, This Week 42%.

3. % of stocks above 200-Day Moving Average, Last Week 50%, This Week 41%.

All measures are now in bearish territory. We need to see improvement in all this measures to go long again.

% of stocks above the 200-Day MA fell again this this week and below its 5-Day MA. It is also below the bullish reading of 50%.

Conclusion.

December has been poor for the ASX.

XJO on the daily chart is now back to the crucial support level of the 200-DMA.

The next few days should give us some indication of market direction for January.

Stay Safe.