The Australian market recovered a little ground this week, after a big drop the previous week. I’m not particularly keen on our broad market at this stage. Energy had a boost this week, but that could be short-lived. Trump’s trade wars are beginning to have clear effects on the world economy with Copper Futures in a bear market, and shipping rates falling heavily since early August. Trump might win the trade wars – which might be fine for America (or some U.S. sectional interests), but detrimental to countries like Australia, which will suffer collateral damage.
XJO Charts, Daily, Weekly, Monthly.
Internals – Australian Market.
Copper
Sector Charts
XJO Charts, Daily, Weekly.
XJO Daily:
XJO is in a short-term down-trend, consolidating at the lows. That consolidation is occurring at horizontal support. The direction of the break-out from that consolidation will be important for direction.
XJO Weekly:
XJO had a small rise this week +0.35%.
The Slow Stochastic (50.10.10) has given a “change of trend” signal – to the downside. This is a medium-term signal.
Fast Stochastic (14.3.3) and Dynamic Zone RSI are on sell signals. The future looks a little bleak – but can change in a heart-beat. Watch the daily chart.
The long-term trend remains up.
XJO Monthly:
XJO is down -2.44% so far this month. We still have two weeks to go. So far, September continues to play out as a poor month for the XJO. Nothing has occurred so far to change its reputation.
INTERNALS – AUSTRALIAN MARKET.
The number of stocks in the ASX100 that are above their 200-Day MA remains this week at 61%. This keeps the Index solidly in bullish territory.
Percent of ASX100 Stocks positive on the Directional Movement Index moved up from 27.3% to 35.4%. It continues to signal weakness in our market.
The cumulative AdvancingVolume-Declining Volume chart continues to signal a bear trend. The last time that happened the XJO fell and then went into a long sideways congestion zone that lasted from April 2017 to September 2017.
Seven out of 11 Sectors were up this week but the most important sector (XXJ) was down -0.34%. That put a cap on upside movement in the broad market index (XJO). The strongest sector was Energy +4.91%. There were several factors behind the spike in Energy, not the least of which was Hurricane Florence in the U.S.. That influence could be short-lived. XMJ also saw a solid upside movement, +1.35%, so Resources had a good week.
The two worst performers were both defensives, XUJ (-1.87%) and Consumer Staples (-1.55%). That’s important to note, as it emphasises the strength seen in Resources. It still remains that our market is captive to weak performance in Financials.
Here’s the Weekly Change chart:
Telecoms continue to perform well – the third best sector this week.
To put that into some context, here’s Sector Changes on a 12-Week basis:
Copper Futures:
Copper Futures remain in a bear market, now consolidating in a congestion zone at the low end of the trend. Copper is often taken as an indication of the health of the world economy. Add to that the fact that the Baltic Dry Index has fallen heavily (~23%) since early August, and we can see the world economy is facing serious headwinds. No doubt, Trump’s trade wars are taking their toll.
Sector Charts:
XUJ
XUJ (Utilities) is in correction mode, down more than -10% since its high in early July. Indicators down in the buy zone but we have to wait and see some definite signs of reversal before getting exciting. Give XUJ a miss.
XMJ
XMJ was up this week +1.35%. It is now in a counter trend rally, but we need more evidence than this to be convinced. While XMJ remains below its 200-Day EMA, it’s best to treat stocks in this sector with caution. One for the traders.
NST, a gold miner, remains the strongest stock – it is worth a look. S32 is also strengthening – worth a look.
XDJ:
XDJ was down -1.27% this week but Friday’s “hang-man” candle holds out some hope for a rebound as it has occurred at horizontal support.
The strongest stocks are gaming stocks, Star Entertainment (SGR) and Tabcorp (TAH). DMP’s big rise the previous week fizzled this week – but is worth watching.
XTJ:
XTJ up +1.6% this week. The worst seems to be behind it.
XTJ is currently in a small triangle consolidation. Look for more upside.
The two biggest stocks are TLS and TPG. Both are worth a look. TPG is stronger.
XIJ:
XIJ up this week +2.59% after a big fall the previous week. It’s bounced off the 50-Day EMA this week, so it looks OK.
CPU and XRO are both worth a look.
XEJ:
XEJ bounced nicely this week from an oversold position. It broke above its restraining oblique trend line and looks to be on the way back. The proviso is that this may be a short-term bounce as a result of Hurricane Florence. Caution.
Santos is the strongest stock, but Woodside is also worth a look
XHJ:
XHJ bounced off horizontal support on Friday and finished marginally above the 50-Day EMA. So it might be OK.
RMD remains the strongest of the Health Care stocks.
Watch CSL and COH for a rebound.
XSJ:
XSJ was one of the weakest sectors this week. It broke below horizontal support on Thursday. Indicators are now in the buy zone, so that break could be a false break. We need to see a quick upside move to regain confidence in the sector.
WOW is now well below its 200-Day EMA this week and the major reason for the fall in the Sector below support.
Wesfarmers is back to its 50-Day EMA. If it bounces here, that should be confirmation that its pull-back is over.
A2M is the strongest stock in the sector.
XNJ:
XNJ continues to hold at the 50-Day EMA. It needs a convincing upside day to confirm that its pull-back is over.
BXB, ALQ, DOW and QUB look to be the strongest stocks. BXB had a big reversal day on Wednesday so its run could be over.
XXJ:
XXJ was down this week -0.34%. The chart is in a falling wedge pattern (bullish) so it might be OK. Indicators are in the buy zone, so look for an upside break to start a counter-trend rally.
Caution is required with most of the XXJ stocks.
Best in the XXJ seem to be QBE and MFG.
XPJ:
XPJ is one of the better performing sectors, up every month for the past six months. It is currently in a short-term congestion zone. Eight out of ten large cap stocks (80%) in XPJ are above their 50-Day EMAs. That compares to 40% of stocks in the ASX100.
(20min delay)