Weekly Wrap. Week ended 7/6/24XJO had a strong week following on...

Weekly Wrap. Week ended 7/6/24

XJO had a strong week following on from the upside reversal day the previous Friday. XJO up +2.06% for the week.

Daily Chart for IOZ, a tracking ETF for XJO:

Daily Chart for IOZ.

IOZ is a tracking ETF for the XJO. It provides some additional information not given by the XJO Chart - Volume. There's not a high correlation between volume on IOZ and the XJO, but over time, is good enough to give some idea of what's been happening.

On the above chart, we have a Point of Control in line, more or less, with the current daily finish. POC is the level on the chart where the most volume has occurred. It often provides resistance to further upside.

The current daily close is also in line with the consolidation back in mid-May. Again that's a solid resistance level.

We can now expect a consolidation or a pull-back. Given the way metals pulled back on Friday night, a pull-back seems likely.

American Market.

SP500 had a good week, up +1.32%, but the doji candlesticks on Thursday and Friday suggest that the trend to the upside is faltering. SP500 finished, more or less, at the top of the Value Zone so consolidation or a pull-back seems likely.Friday was a dramatic day on the American market with a huge intra-day reversal on heavy volume. That, no doubt, set up the market for a rise to new all time highs.

Metals

1. Base Metals

Base Metals had a shocker on Friday night in America, down -3.78%, but that takes it down to the low end of the Value Zone and a major horizontal support.
So we need to wait and see how the market reacts now. Further downside would be very bearish for Base metals and the Australian market.

2. Gold.

Like Base Metals, Gold had a shocker on Friday night, down -3.15%. That takes it down opposite a consolidation zone back in early May, so it likely will stabilise here. Further downside would be very bearish for Gold and Gold Miners.

Sector Performance this week.

It was an odd week amongst the sectors this week.

The usual suspects, Materials -0.45% and Energy -1.77%, were a drain on the market. But they were joined this week by Technology, usually a high flyer. Technology down -0.69%.

On the positive side, Financials including Property did well. XXJ +3.91% and XPJ +3.33%. But they were joined in the leader group by Staples +3.44%.
Woolworths might have finally turned around. WOW up +2.66% and bullish on my weekly Supertrend Line (10/1) for the first time since 15 January. That's good news for long suffering Woolies' shareholders.

Joining Staples, a big defensive sector, were other defensive type sectors this week. Health +2.76%, Utilities +2.53%, Telecoms +2.66%.

The market seems to be making equal bets on Cyclical Sectors and Defensive Sectors. One of them must be wrong.

Weekly Chart for Woolworths.

The down trend from January this year might have come to the end if we can believe the SuperTrend Line.

I highlighted WOW in last week's Weekly Wrap when it came WOW rose on a heavy volume day which suggested which indicated some big hitters were picking up on WOW.

It may not be out of the woods yet. It still needs to navigate about the 20-Week MA and the Volume Point of Control, but it is looking promising.

20 Leaders

The 20 Leaders in the Australian market make up more than 50% of the ASX. 20 Leaders include the big miners and the four big banks. What happens in the 20 Leaders has a big effect on the broad market indices.

Here below is the performance of individual stocks in the 20 Leaders over the past week.

Prominent on the above chart are the Financial and Property Stocks. Goodman +5.34%, CBA +5.03%, QBE +4.38%, NAB +3.89%, Westpac +3.81%.

Joining that group of strong stocks was Aristocrat +5.01%.

Worst performer this week in the 20 Leaders was Xero, down -2.43%. It was slammed on Wednesday, down 4.45% after it announced a convertible notes issue. The market was not happy. It recovered a little on Thursday and Friday, so Wednesday might have just been a hissy fit.

The other poor performers were in resources. Rio -2.67%, Woodside -1.77%, Fortescue -1.5% and Santos -1.05%.

It usually pays to stay with the strongest and avoid the laggards.

Strongest stock according to the 200 Day Rate of Change is Goodman with a reading of 58%. Goodman. That's mentioned above.

The other two in the top three are Wesfarmers and Wisetech. Both up around +3.5% for the week.

Long-Term Investment Indicator

My Long-Term Investor Indicator is based on New Highs minus New Lows Cumulative. While the NH-NL CUM line remains above its 10-Day MA, the Long-Term Investor can maintain their bullish positions.

While the NH-NL Cumulative looks good, there is a looming problem.

NH-NL on a daily basis bottomed out in early November, 2023 which has led to the strong up trend in the ASX since then.

NH-NL on a daily basis topped out in March. And, although still on the positive side, have been showing lower strength since March. That drop off in the leaders is a negative divergence which often precedes a fall in the market. I wouldn't be too confident of the bull market continuing for much longer. But - price is always king. The market is still bullish but watch for a pull-back in the next few weeks. August, of course, is often the start of a big fall in the market.

Conclusion.

The Australian and American markets both did well this week. Both are now at significant resistance levels.

Negative results in Base and Precious Metals on Friday night suggest that our miners might be in for a torrid time.

I'll put up on my blog any significant change to the NH-NL Cumulative chart as it might be a leading indicator for long-term investors.

Good luck.
RB