5/2/23. Weekend Report - The Week That Was. Week Ended...

5/2/23. Weekend Report - The Week That Was. Week Ended 3/2/23.

This week saw further upside in the broad market.

XJO Monthly Chart.

We've only had three days so far in February. XJO up so far +1.09% building on a strong January when XJO up +6.22%.The Index is above the 10-MMA, Hull MA13, 50-MMA, 200MMA, Supertrend (7/1.5).

Monthly RSI is at 58.19. That's a bullish reading.

XJO Weekly Chart.

In the past five days, XJO risen +0.86%. XJO Weekly is in an uptrend - higher highs and higher lows.

10-Week MA, Hull MA13 and Supertrend are all heading to the upside.

Weekly RSI is at 66.34. That's above the Monthly RSI of 58.19, which indicates bullish XJO momentum.

Stochastic is showing a negative divergence which suggests we will see a pull-back.

XJO Daily Chart.

XJO has been in a strong up-trend since early January. Daily RSI is now at 73.79 - that's overbought.

The three Timed RSIs (monthly, weekly, daily) remain in ascending order. 58.19, 66.34, 73.79. The chart remains bullish.

Stochastic is showing a negative divergence, confirming the negative divergence on the Weekly chart. The future may not be as robust as the RSIs are currently suggesting.

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

This week's chart:

Phwoar!! Look at the number of overbought sectors on the daily columns (RSI >70). Five sectors out of eleven are now >70, and XXJ is just a smidgin away with an RSI at 69.88. We haven't seen anything like this for a long time.

Bullish sectors with RSIs arranged in ascending order are: XDJ, XIJ, XTJ, XHJ, XSJ, XPJ, XNJ.

Bearish sectors with RSIs arranged in descending order are: XEJ, XUJ

Sectors in pull-back mode (Daily RSI falling below Weekly RSI) XMJ.

Sectors in Counter-trend rally mode (Daily RSI above Weekly RSI, WRSI below MRSI) XXJ.

Gold (an industry group within XMJ) is in pull-back mode.

So, on the daily time-frame, eight out of eleven sectors are bullish.

XDJ is extremely overbought with a daily RSI at 80. We don't often see that in a sector.

The big change this week was in XMJ - which is now in pull-back mode after being bullish the previous week. That's important as it is the second largest sector in the ASX (after XXJ) and contains bell-wether stocks such as BHP and Rio Tinto.

NewHighs-NewLows Cumulative.

This is a long-term lagging indicator.

NH-NL Cum is represented by the blue line. It is now above the 10/21/34 Day Moving Averages. The Moving Averages are all aligned in bullish fashion from 10DMA at the top, then 21, then 31. This provides a buffer against pull-backs.

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 12th week in a row and has moved well above its 5-Week MA. This week there were 37 Strong Stocks and 4 Weak Stocks. That's another confirmation of the current strength in the up-trend.

% of Stocks above key moving averages.

1. % of stocks above 10-Day Moving Average: Last Week 70%, This Week 67%.

2. % of stocks above 50-Day Moving Average, Last Week 75%, This Week 78%.

3. % of stocks above 200-Day Moving Average, Last Week 69%, This Week 76%.

Stocks above the 200-DMA are now nudging close to the 80% level - that's the overbought level.

Stocks above the 10-DMA are showing some weakness (short-term weakness).

Conclusion.

XJO is in a strong uptrend. Some structural weaknesses are beginning to show up with XMJ (Materials) in retreat, and Stocks above 10-DMA in retreat.

Negative divergences on Stochastics are forward looking and suggest we will see a pull-back in the near term. We may see a test of the April, 2022 high before a pull-back. XJO currently at 7558. April, 2022 high was 7618 - just 60 points away. That old high could be hit in just one day's trading. (I'm not predicting that - just indicating how close the market is to that old high point.)

That high of 7618 has history for the XJO. In round numbers, it was also the high back in Jan, 2022 and August, 2021. A decisive break above 7618 would be tres bullish.

Our market probably deserves a well-earned rest after a strong performance since the beginning of the year. At this stage, I believe that any pull-back is likely to be bought.