XAO (ASX) Short Term Trading Weekend Lounge: 11-13 Oct

Originally posted by redbacka: ↑

In Australia yesterday:
XJO was up modestly yesterday +0.36% and finished at a obvious flexion point, the confluence of the 5-Day and 50-Day EMAs. If the Jobs Report in America was poor for the market, we'd go down, if positive, we have a good chance of heading up into the zone above the 50-Day EMA. That's usually a good go-long sign.
In America overnight:
The American Jobs Report was favourable for the market.
Dow Jones +1.22%. SP500 +0.91%. Nasdaq +1%. Small Caps +1.43%.
Small Caps are now out-performing the market - that's a common seasonal factor.
SP500:
The chart shows an early "buy" signal on the DZRSI. "Buy" signals are imminent on DZStoch and MACD (3.10.16). Barring accidents, this looks set to go higher.
The elephant in the room is the dead-line for the Phase One China/American trade deal set for 15/12/19.
Commodities:
Commodities Index +0.64%. Base Metals +1.35%. Energy +0.91%. Gold -0.99%.
Those results are favourable for our resources stocks on Monday.
I keep reading optimistic predictions from the gold-bugs - but I still can't see reasons for that in the charts.
CNN's Fear and Greed Index:
FGI has fallen back out of the Extreme Fear Quadrant into the Fear Quadrant despite the American market being up the last three days which followed a big reversal day on Tuesday. That's promising for further upside movement, although any bad news could knock the needle down further.

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Weekly Wrap

Last week I said: Given the frothy nature of our market, it's possible we'll see a pull-back this week. If that happens, look to buy-the-dips.
It was a poor week on the XJO this week. XJO down -2.03%.
Daily Chart:
So, is it safe to buy this dip?
Going long in a bull market is usually safe, if the index chart moves back above the 50-Day EMA after a dip. That seems likely to happen on Monday given the strong performance by the U.S. market after the Jobs Report.
We still don't have any confirmation on any of the indicators, althought DZRSI is likely to rise above its lower band giving an early "buy" signal. The less trepiditious might wait for further confirmation from indicators.
A lot of short-term damage was done to ASX100 stocks this week, although the medium-term and long-term remain positive.
Less than half the ASX Sectors are positive in the short-term. 82% remain positive in the medium-term, and all sectors are positive in the long-term.
This qualifies, then, as a "dip" to be bought.
XHJ (Health) remains the strongest sector by far on both the Relative Strength (0.64) and Cumulative Momentum (45.33). No other sector is nearly as strong. Six XHJ stocks sit in the ASX100 and all six are above their 50-Day EMAs. The strongest stock is CSL. Its been my favourite stock now for some months and remains a "hold".
The weakest sector by far is Financials (XXJ) with a Relative Strength of -0.47 and a Cumulative Momentum of -19.06. Sixteen XXJ stocks sit in the ASX100 and thirteen are below their 50-Day EMA. A dismal reading. The four big banks are particularly weak. Leave alone until we see some turn-around in the banks.
Here's the Cumulative Momentum Index for Large Cap Stocks with Low Volatility:
The three stocks with the strongest momentum are CSL, Woolworths and Sydney Airports. Those were the picks from previous week. Woolworths, however, violated the 5/20 negative x-0ver rule on Thursday and would have been sold. Continue to hold CSL and SYD. (Note: because of higher volatility, Miners and Energy stocks are eliminated from this set of stocks.)
In ETFs, the two picks were IOO and IEM. IEM violated the 5/20 negative x-over rule on Monday and would have been sold. IOO and Gold are the two strongest ETFs on a Momentum basis, but Gold is still negative in the short-term so it is eliminated. Continue to hold IOO.
Seasonally, the market tends to be weak in the first half of December and strong in the second half (Santa Rally). That looks to be playing out again this year. The Elephant in the Room remains the trade war between China and the U.S. A First Phase Deal is set for 15 December. If that fails, then all bets on a Santa Rally will probably be taken off the table.