XJO Daily Chart.XJO up strongly this week, +1.81%. The Index has...

XJO Daily Chart.

XJO up strongly this week, +1.81%. The Index has broken out of its down-trend channel.

The short-term RSI2 is now very over bought (above 90) for the first time since April. It can, of course, remain over bought for some time as it did in March-

April when the market continued to trend higher.

The break out to the upside also negates the possibility of a head-n-shoulderts formation completing. That's one worry off the plate.

American SP500.

SP500 is in a strong up trend beginning in mid-March. It is now at the top edge of the Standard Error Channel. Expect a pull-back.

Likely support is the first horizontal support line on the chart.

How any pull-back will affect Australia is a moot point. While SP500 has been in a strong up trend, XJO has been in a down trend since mid-April. Any strong pull back in the U.S. will undoubtedly affect Australia. We'll just have to see how this plays out.

Chinese events are having a strong effect on the Ozzie market. Recent loosening of credit in China could help Australia maintain a bullish profile.

XJO Weekly Chart

This week, XJO bounced strongly off the 50-Week MA and took almost everything in the market up with it. Unless you were in Health Care (XHJ) this week, you've probably done very well - even the dart throwers are cheering.

Sector Performance this past week.

XHJ down this week -5.86%, after CSL posted a poor update to the market. CSL fell -6.89% on the news on Wednesday and continued down on Thursday and Friday.

The rest of the market did well. Info.Tech. came back with a vengeance this week, up 5.55%, followed by Financials (XXJ) up 3.38%. XXJ seems to be returning to a positive stance. This is its best week since October, 2022. That started a strong up trend for Financials. Perhaps the same can happen here?

Banks have been a drag on the XXJ but they performed well this week, MVB up +3.51%.

Momentum.

A quick way to judge momentum is to compare the Weekly RSI and the Daily RSI.

By this method, XMJ, XEJ and XXJ have positive momentum.

Bonds (IAF), Gold Miners (XGD) and Health (XHJ) are looking a bit sick.

I wouldn't rule XIJ out at this stage, even though momentum is negative. XIJ did very well this week and may be returning to further strength. But, the chart is saying to stick with Energy, Materials and Financials.

Conclusion.

The Australian market broke out of its down trend this week. Look to more upside but continue to monitor global market events.