Fair enough. And they are close enough.
Here's a chart of the past 100 days showing candles for both XJO and STW. Note how the candles over-lap almost invariably.
As I've explained before - I use STW because we can get Volume Stats - which we can't get for XJO. Volume is an invaluable add in market analysis.
STW Monthly Chart (ETF for XJO)
The month of September has had only one day of trading so far. Not enough to think about in the longer term
August saw the market fall by -0.7%. Not much in the long term scheme.
For many months, the broad market has been range bound. The lower edge of that range lies on the "Point of Control" from the Volume Profile at the left of the chart. POC is the long narrow grey rectangle. That's the level at which most volume has occurred in the past 50 months and represents a strong level of support. It also coincides with the 50 Month Moving Average - another support level.
We are coming into two dangerous months on the year, September and October. A pull-back is likely to occur, but I'd expect the POC to provide support in any pull-back.
STW Weekly Chart. (Tracking ETF for the XJO)
The Weekly Range corresponds, more or less, with the Value Zone of the Volume Profile.
This week, the ASX was up strongly. STW for the week was up +2.74%, XJO up +2.29% for the week.
(I use the STW chart as it provides valuable information about Volume, which is absent from the XJO chart.)
Given the nature of this range bound market, any further upside after this week's strong performance is likely to be held by the upper area of the current weekly range. A break above that would be bullish.
Sector Performances this week.
This week's upside move was broadly based, with every Sector on the plus side.
Best performing Sectors were Discretionary +3.37%, Materials 3.21% and Financials +2.6%. Weakest sectors were Staples +0.43%, Energy +0.67% and Utilities +0.69%. Two of the wekest sectors were Defensives so we've seen some circulation out of Defensives and into Cyclicals. (One week's performance is not necessarily a good indicator of trend performance.)
Momentum.
I use RSI from three different time scales to measure relative changes in momentum: monthly, weekly and daily.
Using this I sort Sectors into Bullish (columns slope up), Bearish (columns slope down), Pull-back (up then down) and Counter-trend rally (down then up).
Bullish: Financials, Discretionary, Property, Bonds (Financials joined this group this week).
Bearish: Energy, Telecommunication Services, Utilities, Industrials.
Counter-trend Rally: Materials, Health, Staples, Gold, XJO.
Pull-back: Information Technology.
It's probably best to avoid stocks in the Bearish Sectors, and look for opportunities in the Bullish, Pull-back and Counter-trend Rally Sectors.
Energy is an interesting case. Its monthly column is the strongest for all the sectors - so long-term it has been very strong. Its weekly column is the third strongest of all the sectors. But the three columns slope downward, so it has been falling for some time.
XEJ.
In this daily chart we can see that XEJ was in a strong up trend which ended on 10th August. The ensuing pull-back was well predicted by the negative divergence on the MACD Histogram.
Thursday was a big down day followed by a big up day on Friday. MACD Histograms is showing a positive divergence from the chart - so I would expect to see more upside in XEJ. Energy was up sharply 1.55% on Friday night in America. Watch this space.
100 Leader Stocks above their 200-Day, 50-Day and 10-Day Moving Averages.
Above their 200-DMA: last week 31%, this week 48%.
Above their 50-DMA: last week 33%, this week 50%
Above their 10-DMA: last week 33%, this week 67%%.
These figures reflect the broad based rally seen in the Oz market this week. The "Stocks above 10-DMA" is now at a level seen last at the end of July which led to the down- turn in August. So there may not be a lot more upside in this current rally.
Conclusion.
The Australian stock market has been range bound for many weeks. There's nothing in the current charts, despite this week's good result, to suggest that the market will break out of that range.
Last week I said: If all goes to plan, we should see a rebound this week off the lows. We got the rebound this week - let's see how the rest of September goes.
I'll be looking for best performances from Discretionary and Energy.
(20min delay)