XJO down this week, -0.87% completely reversing the previous up week. It remains in a sideways trend with a downside bias (Hull MA13).
Here's the XJO Weekly Chart:
The stumbling block for the XJO is that big dark candle back on 26/2/21 and before that, the big dark candle back on 19/2/21. If the XJO breaks below that first candle, then the second candle provides another level of support not far awary. The two support levels are 6670 and 6585. Resistance lies at 6830. Watch for a break of those levels.
American SP500:
Like Australia, the American SP500 was down -0.77%, but, unlike Australia it remains in an up-sloping, bullish channel with an up-side bias (Hull MA13).
SP500 finished flat (-0.06%) on Friday night. So that doesn't provide much guidance for our market on Monday. Commodities Index, however, which affects our Resource Stocks, was up a healthy +2.19% on Friday after falling heavily on Thursday -4.74%. Thursday's action has serious ramifications for our major Resource Stocks.
Our Resource Stocks have been falling heavily in recent times and the biggest Resource Stocks (BHP, RIO and WPL) are all now into correction territory (down more than -10% from recent highs). So we might see a rebound in those big Resource Stocks on Monday.
One-Week Sector Changes.
In the past week, six sectors have been up and five down. Because the down sectors included the two biggest sectors (Materials -3,98% and Financials -0.58%) that pushed the overall market indicator well into negative territory. Three of the six up sectors included the three major Defensive Sectors (Utilities +2.15%, Telecoms +1.84%Health +1.26%).
If support levels (see above) are broken to the downside then it might be time to turn to the Defensive Stocks, or, to the XJO inverse ETF - BEAR. Bear is the Defence part of my Offence/Defence Indicator
The important panel to look at here in the chart below is the bottom panel. This shows the relative strength of BEAR compared to XJO. (actually just above the zero line). The important panel to look at here in the chart below is the bottom panel. This shows the relative strength of XJO(ASX200) compared to BEAR (ETF Inverse of ASX200).My Offence/Defence Indicator has ticked up into the Defence area.
When the Mansfield Relative Strength of Bear/XJO is above zero, it might be time to look at some Defensive strategies.
NewHighs-NewLowsCumulative:
NewHighs-NewLows Cumulative remains above its 10-Day MA.
This is an instrument for Long Term Investors. Long Term Investors should remain invested until the NH-NL drops below its 10-Day Moving Average. This measure can be a lagging instrument, although it was spot-on in February 2020 when it gave a sell signal. It's buy signal in 2020 came well after the market bottom in late March, 2020.
Strong and Weak Stocks in the ASX100
Last week, 11 stocks made the Strong list. This week 5 stocks made the list. Last week, only two stocks made the Weak list. This week, 5 stocks made the Weak list. So No. of Strong stocks dropped, and the number of Weak stocks rose. On balance, that's not a comforting move in the two lists.
Large Cap Stocks with Low Volatility.
Last week, only one stock was picked, MQG. MQG was down -1.74% compared to XJO down -0.87%. That's a win for the XJO. As a risk management tool, however, the result isn't too bad, as normally, three stocks are picked.
Only one stock meets the criteria this week: again that is MQG.
Experiment - Momentum Stocks:
As of 1 March, I'm now following the adjusted criteria for investing in Momentum Stocks. The process is: Look at the top three performing Sectors, and select the three strongest performing stocks in each of those sectors. If any chosen stock falls below its 20-Day MA - sell it.
For the past three months, the strongest sectors are XMJ, XEJ, XXJ. The three strongest stocks in each sector are: OZL, ILU, ORA, OSH, STO, SOL, WBC, BOQ, ANZ. All of these stocks were currently above their 20-Day MAs at the time of beginning the experiment.
Results after three weeks are: OZL +4.5%, ILU -1.01%, ORA +0.68%, OSH +0.48%, STO -0.96%%, SOL +1.66%, WBC +2.81%, BOQ +1.02%%, ANZ 7.95%. Average gain: +2.13%. That's well above the gain for the past three weeks in the XJO of +0.52%. ILU, BOQ and STO were dropped from the list as they fell below their 20-Day MAs.
Conclusion: Our market (XJO) is coasting in neutral this past week, leaning to the bearish side. Breadth is looking negative.
We need to watch how the XJO breaks from its current sideways consolidation.
(20min delay)