Weekly Wrap, week ended 23/8/24.XJO was up four out of five days...

Weekly Wrap, week ended 23/8/24.

XJO was up four out of five days this week. The only down day was Friday, which was a marginal miss, -0.04%.

Results for the other four days were: Monday +0.12%. Tuesday +0.22%. Wednesday +0.16%. Thursday +0.21%.

This week has been notable for only small daily shifts in the Index. Not much interest in pushing the market one way or the other - but there was a small upwards bias.

What were market participants waiting for? Probably, the Jackson Hole Economic Forum with J. Powell speaking on Friday night (Oz time). Well he rewarded attendees and the wider investment community with the usual hedged comments - but practically said (without saying it) Interest Rates would be cut in September. The American market rejoiced (didn't they know that already), with the Nasdaq, for example rising +1.47%, and the Dow Jones up +1.14%. The Dow result, although the smaller %age figure, was more convincing than the Nasdaq, as the Dow broke higher from a consolidation zone. That's likely to lead on to a strong move on the ASX on Monday. ASX Futures up +0.51% on Friday night.

Dow Jones

Dow Jones remains in a strongupside trend, sitting above the short-term Bollinger Bands (10/0.8)

The index is now at a major horizontal resistance level.

The index has now recovered all the losses in the big pull-back in early August.

STW tracking ETF for the XJO

Like the Dow Jones, the ASX200 is in a strong up trend. BY Friday, it was up +5.2% since the big pull-back in early August. That doesn't completely recoup the early August losses, but that might change on Monday.

The trend remains bullish and I can't see any reason at this stage to think that the ASX is ready for a pull back.

STW isn't overbought and no sneaky negative divergences lurk in the indicators to suggest a fall is coming.

ASX Sector Performance

The high-light of the week was the great performance by Technology (XIJ) up +8.65%. That was largely due to the performance of Wisetech (WTC) up +28.6% after a positive report that pleased the market. WTC is the largest stock in the XIJ.

The other good sector result was Industrials (XNJ) up +2.14%, although that pales when compared to XIJ's performance. Behind the good rise in XNJ was Brambles (BXB), usually considered a "boring" stock. But BXB surprised the market with its report and rose +14.9% for the week. BXB was already in a strong up trend when it reported on Wednesday, and it was up and up for the rest of the week.

Financials (XXJ) suffered a small loss for the week of -0.11%. The banks were relatively lack lustre this week, but the XXJ result was also affected by ex-dividend day for CBA on Wednesday when it fell -2.56%.

Gold Miners (XGD) which is a sub-set of the Materials Sector (XMJ) had another good week, up +4.02%.

Lithium Miners had a good week, and there's a lot of optimism suggesting that the bear market in Lithium is ending.

The chart for Pilbara (PLS) is looking positive, but I'd like to see some more positive action before declaring an end to the bear market.

PLS has been in a consolidation for about a month. On 15 August, PLS showed a spike down on heavy volume. That's a probable indication that the bears were throwing in the towel, as that low has been followed by upside action.

I'd like to see a solid break above the blue 50-Day EMA before thinking that this battle is over - but then the 200-Day EMA needs to be overcome.

Long-Term Investor Index

The 10-Day MA of my LTII fell below zero last week for the first time since December, 2023. I warned then that it could be a false break as the signal occurred during a rising market. (10-Day MA is a lagging indicator). This week's action has vindicated that warning, as the market has continued to rise and LTII 10-Day MA has risen back above zero. Long Term Investors can again breath easily.

The recent pull-back was caused by negative sentiment in the U.S. with suspicions that a recession could be looming. If employment figures continue to deteriorate, that's still a possibility.

Seasonality

September has a reputation for being the worst month for stocks, with the Dow Jones down about 1% on average for September since 1928. (This is a world-wide phenomenon, but just an American one.)

That sounds ominous - but the Dow Jones has only been down 55% of the time in September since 1928. (See here for an informed discussion.)

So, betting on a fall in the market in September is about the same as a coin flip - about even-stevens.

With an interest rate looming at the Federal Reserve meeting in September - this could be one of the years when a negative result may not occur.

Watch the charts and take care.