Sat/Sun 24/25 Oct, page-17

Weekly Wrap for the week ending 23/10/20 with an up-date on Australian Banks
XJO Daily Chart:

XJO was down marginally this week -0.16%%.

The three main Moving Averages followed by Investors are: 20DMA, 50DMA, 200DMA. They are currently sitting in bullish fashion, 20 above the 50, and the 50 above the 200.

The Triple Supertrend Lines are all bullish (yellow).

This week's marginal pull-back looks like consolidation in an on-going bull-market.

Banks.

The Big Four major Banks last week were all sitting on their 200-Day MAs. Here are charts for each of the Big Four.

CBA:

CBA continues to sit on its 200-Day MA. Friday's action took it marginally above the 200, but not enough to be convincing.

ANZ:

ANZ was up +2.43% this week, well above the -0.16% fall in the XJO

ANZ is about +3% above its (down-sloping) 200DMA. That gives it a comfortable buffer for a couple of day's downside movement. It is, however, at horizontal resistance which has stymied progress on two previous occasions. It needs to pull above that.

NAB:

NAB's Chart is similar to ANZ's. NAB up this week +1.61% and sitting above its 200-Day MA but hitting horizontal resistance. Like ANZ, it needs to get over that to have a chance of significant upside.

WBC:

Westpac is similar to ANZ and NAB but not quite as strong. It is above its 200-Day MA but held by a down-sloping restraining trend-line from 13 October. A move higher above that trend-line should see WBC carry on higher.

Three of the big four banks (ANZ, NAB, WBC) are above their 200-Day MAs, but the move higher is not yet significant enough to say the worst is over. Each of those three need to overcome overhead resistance. If that is achieved, we should see higher prices and, highly probable, a significant move in the broad market index, XJO. Keep Watching

Breadth.

The long term measure of breadth improved this week

ASX100 Stocks above the 200-Day MA rose from 46% to 49% this week. That's the best reading since late February, just before the "crash".

Stocks above the 50-Day MA remained static this week 62%, while stocks above the 10-Day MA fell from 71% to 44% this week.

What does this tell us? Basically, the market still has long-term momentum on its side, but this week's drop is probably consolidation.

NewHighs-NewLows Cumulative.

NH-NL Cumulative continues to improve and remains well above its 10-Day Moving Average. New Lows remain as insignificant level (below five per day) while New Highs are tending to be in the 40-50 per day. On the basis of this chart, long-term investors can remain bullish. A fall below the 10-DMA should be taken seriously. Such an event occurred back in late February this year and began the big fall in February-March.

Stocks/Bonds Ratio:

The Stocks/Bonds Ratio remains above zero, i.e., that favours stocks over bonds. Despite the small fall in the XJO, Stocks/Bonds Ratio actually improved. Stocks remain the place to be.

Weekly Performance of Sectors:

Sectors to fall this week were Utilities, Telecomms and Consumer Staples. They are all defensives and bore the brunt of the selling. This suggests we're seeing rotation going on rather than any general bearishness.

Strongest stocks in the Eleven Sectors

Here's a list of relatively strong stocks in the ASX100:

Utilities: No listings

Industrials: ALL, QUB, QAN*

Materials: BSL*, OZL

Financials: ANZ, MQG, NAB.

Property: No Listings

Health: COH*

Information Technology: APT*, CAR.

Consumer Staples: CCL*

Energy: No Entries

Consumer Discretionary: REA*

Telecommunications: No Entries

I use a set of six criteria to test each stock. The stocks chosen are positive on all six criteria.

Last week 22 stocks met all criteria. This week 13 stocks meet all criteria.

*The strongest stock in each sector is marked with an Asterisk.

These are not recommendations - but a filtered selection which might be worthy of further investigation by medium-term traders.

Large-Cap Stocks with Low Volatility

All stocks in this list are positive on the Three Supertrend Lines. That's another significant pointer to underlying momentum in the market.

The three best stocks this week are MQG, SHL, NAB. They were also the picks last week

The three best stocks last week were MQG up +1.37%, SHL flat 0.00%% and NAB up +1.61%. Match those figures against the fall in the XJO of -0.16%.

ETFs:

The best three ETFs picked for last week were MVB, VSO and ATEC.

MVB +1.34%. VSO -1.43%. ATEC up +1.09%. That provides an average rise of 0.33%. Not much but a little better than the fall in the XJO of -0.16%

The picks for the coming week remain the same three ETFs.

Good luck with your investments in the coming week.