Friday 10 April ASXSPI200, page-43

Weekly Wrap, week ended 9/4/20
XJO was up for the third week in a row, up +6.31%. That doesn’t change the overall view of this market – it is a bear market. This is a market for traders. Investors – sit out.

The chart shows a rising wedge formation which is bearish. Momentum as shown by the MACD is falling - which usually precedes a fall in the stock index. CCI and Slow Stochastic are both overbought.

The current short-term trend is up but is nearing the end for this stretch.

Strategy – sell rallies.

Cumulative New Highs Minus New Lows for the Australian Market shows slowing momentum:

This chart changes direction slowly. But when it changes – it should not be ignored. It is currently bearish, but the steepness of the dive is slowing.

With the counter-trend rally which occurred over the past three weeks, the number of New Lows fell to a trickle. But, until we see an improvement in the number of New Highs, this remains a bear market.


Next, a graph of stocks above Key MAs, 200, 50 and 10:

The % of ASX100 stocks above the 200-DMA improved a little this week to 11% (blue line). Until we see this figure cross back above 20% – investors stay away.

Stocks above the 10-Day MA has risen to 83%. That's overbought. It doesn't stay that way for long looking at previous cases.

Stocks above both the 50 and 200-Day Moving Averages are:

A2M, XRO, RMD, CSL, EVN, AST.

Just six stocks out of 100 - a dismal performance.

Notably absent from this group are most of the stocks from the top 10 biggest stocks in our market. CSL, a defensive stock, is the only exception

All but one sector, Health (XHJ), are now negative on the Cumulative Momentum Index.

Here’s the CMI Chart for Large Cap stocks with low volatility:

Only two stocks have positive Cumulative Momentum, CSL and AST. CSL was a carry-over from the previous week. It was up +8.18% this week. AST becomes a new pick for the coming week.

Two ETF qualify – Gold (POG in Ozzie Dollars) and IAF (multiple bonds ETF). GOLD.AX remains in the list for the sixth week in a row. It was up +0.26% this week. IAF falls out of the picks, down -0.4% this week. It is replaced by IOO (ETF for international stocks.

To sum up, we’ve had three weeks of an up-market. The XJO is showing signs of a possible reversal in the near future. The stock/etf picks this week are: CSL, AST, Gold (priced in Oz Dollars) and IOO (International Stocks).