Short Term Trading Weekend Lounge: 26-29 Oct, page-50

Weekly Report.

The Australian market declined heavily again this week.  It is now so bad, it's difficult to see how it can get any worse.  . That's good news for those with nerves of steel.  Surprisingly, some of the Financials, although down, outperformed the XJO in the past week, so there seems to be some rotation into some of the financial stocks.  XEJ has been volatile in this pull-back - look to some of the Energy stocks for swing trades if this fall seems to be over.  (See comments below for each of the sectors.). Until proven otherwise, any upside movement should be viewed as counter-trend rallies.

All Sectors currently are rated as "bearish".

• XJO Charts, Daily, Weekly, Monthly.
• Internals – Australian Market.
• Copper
• Sector Charts.
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XJO Charts, Daily, Weekly.

XJO Daily:

XJO is now back down to the base support set back in May-October, 2017.  The doji candlestick on Friday coming at support, suggests we might see a rebound here.  Wait for confirmation of a big up day.

Indicators are extremely oversold but showing positive divergences which support the idea of a rebound.

If this does start to turn around to the upside, look for a move back up to the major resistance level (blue horizontal line).

XJO Weekly:

XJO had a negative week, down -4.62%.  We can see clearly here the base level support back in 2017.  That was a powerful level and will probably hold in the coming week.

The Long Term Trend is now down - so any break to the upside is likely to be a counter-trend move.

Indicators on the Weekly Chart are now very oversold.  Look for a rebound.

XJO Monthly:

XJO is now at the end of the fourth week of October, with a couple of days to go..  It is down -8.47% so far this month

Both the short-term Stochactic and RSI are on sell signals.

The very long-term trend remains up.

INTERNALS – AUSTRALIAN MARKET.

Internals are now so weak, it is difficult to see them getting any weaker.  

The number of stocks in the ASX100 that are above their 200-Day MA fell from 37% the previous week to 19% this week.  Rarely does this metric hold below 20% for very long without a rebound.

Percent of ASX100 Stocks positive on the Directional Movement Index fell from 24.2% to 7.1%%.  The only stocks reading positive on the DMI were gold stocks, three property stocks and Health Scope which turned positive as the result of a take-over offer.  Every other stock in the ASX100 was negative on the DMI.  

The % of ASX Stocks above their 50-Day EMA fell from 21.2% to 8.1%, about the same as the DMI figure.  

We need to see more improvement in the internals before being confident that the market has turned around.   In the chart below, the blue line shows the number of stocks above the 200-Day EMA.  

 

 

 

 

 

 

All 11 Sectors were down this week.  The Gold Industry Group (XGD) was up, +0.29% but I now have it on a short-term sell signal.  The best performing sector, relatively, was Property -1.14%.  The worst was Energy, -9.33%.  Energy can be very volatile, so look for a rebound in the Sector.

Copper Futures:

Copper has been in a long sideways consolidation above the old double bottom.  Such action usually implies a break to the upside.  This should bounce here, but still needs to get above the 200-Day EMA to prove bullish.  We still don't have "buy" signals on the indicators.

SECTOR CHARTS

XMJ (bearish):

XMJ was down this week, -4.63%.  It is now down to the next level of support.   RSI is still in the do-not-buy zone, but close to giving a buy signal.  A rise above the lower band shown on the chart would give a buy signal.

The strongest stocks are the three large-cap gold miners, NCM, NST and EVN.  But I have them on a short-term sell signal.  Next best are the iron ore miners, FM and Rio Tinto.  Look for strength in those if we get a rebound.

XEJ (bearish:

 

XEJ was down this week, -9.33% and has broken below its 200-Day EMA for the first time in over a year.  Indicators are extremely oversold.  RSI.14 is below 20 - a reading rarely seen.  Look for a counter-trend rally.

Santos is the strongest stock.

XIJ (bearish):

XIJ was down -6.72% this week.  It has now fallen the expected amount from the old double top.

On the minus side, it has fallen below its 200-Day EMA but has reached the next level of horizontal support.

CPU is the strongest stock.

XXJ (bearish):

XXJ had a poor week, down -4.12%.  It is a long way below its 200-Day EMA, so we could see a counter-trend move.  

As mentioned above, somewhat surprisingly, there seems to be some rotation into some of the Financial Stocks.  Here's a graph showing relative strength.  The zero line represents the XJO.  Stocks above zero are out-performing the XJO.

Notice that some of the banks are starting to pop up on a relative basis:  Bendigo and Adelaide, CBA, Suncorp and Westpac.

XUJ  (bearish):

XUJ (Utilities) fell this week -4.89%.  It remains below the "cloud" and below the 200-Day EMA.  Short-term indicators are on "sell" signals but showing positive divergences, so a counter-trend rally could occur.  

Ausnet looks to be the best opportunity in this Sector.

XDJ  (bearish):

XDJ had its worst week in many years, -7.54% and is now well below its 200-Day EMA.  Short-term Indicators are on extremely oversold.  Look for a bounce.

Domino's remains the strongest stock.

XHJ (bearish):

XHJ fell below its 200-Day EMA.  It was down this week, -5.19%.

The Bollinger Bands on the Stochastics have squeezed tightly together - which is usually a good sign that a move to the upside is close at hand.  

HSO (Health Scope) is the strongest stock, but only because it is under take-over action.

Next best is Ramsay Health Care, which is in a long side-ways consolidation.  Watch for a break to the upside.

XNJ (bearish):

XNJ fell this week, -2.68%.  Positive divergences show up on indicators so this could bounce here.

TCL bounced nicely off its 200-Day EMA on Thursday.  It could be the best bet in XNJ.  Next best and worth a look is BXB.

XSJ (bearish).

XSJ fell -4% this week.  Short-term Indicators are extremely oversold, so we can expect a short-term rally.

CCL is the strongest stock.

XTJ (bearish):

XTJ down -4.42% for the week and is clearly below its 200-Day EMA.  

XTJ consists of only two large-cap stocks, Telstra and TPG.  I now have a slight preference for TLS as a trading proposition.

XPJ (bearish):

XPJ was the best relative performer this week, down -1.41%.  

XPJ is proving its worth as defensive play - but that's not saying much, as it remains below its 200-Day EMA.

IOF is under take-over action.  Leave that out of calculations.

CQR, GMG and GPT have all been up each of the past two weeks.  Those are the best bets in the sector.