The end of the week saw mixed results likely to affect our market. SP500 fell heavily, but commodities look likely to improve. If SP500 continues to fall (probably), we’ll tag along as world stock markets are currently well correlated. Strength in the resources sectors should provide a cushion against major losses.
XJO Charts, Daily, Weekly, Monthly.
Internals – Australian Market.
Copper
Oz Metals and Miners.
Financials, XXJ
Other Charts of Interest, XUJ, XGD, SP500.
XJO Charts, Daily, Weekly.
XJO Daily:
XJO set a new 10-year closing high on Friday, but not a new intra-day high. It remains in a trading range, more or less between 6135 to 6300. The index is currently at 6300.2, at the top of the range. Wait to see which way this breaks. Medium-term and long-term, the trend is up.
XJO Weekly:
XJO was relatively flat this week +0.23%.
The chart is in a wave-like structure in a long-term up-sloping channel.
The weekly chart is close to the top of the Standard Error Channel. More upside could occur, but some sort of pull-back or consolidation in the near future is likely. Wait.
XJO Monthly:
The monthly chart is in an up-trending channel since August, 2011.
A short-term pull-back seems likely.
In the long-term, the XJO looks likely to test the 2007 high by the end of the year. Buy dips.
INTERNALS – AUSTRALIAN MARKET.
The number of stocks in the ASX100 that are above their 200-Day MA hasn’ moved much this week, 74% in the previous week, 73% this week. This keeps the Index solidly in bullish territory, and rising steadily
Percent of ASX100 Stocks positive on the Directional Movement Index improved this week from 74.7% to 78.8%. That is getting close to the 80% overbought level.
Five out of 11 Sectors were up this week. The worst result was in the Consumer Staples Sector -1.29%. Not far behind was XHJ (Health) -1.18%. Any pull-back in those sectors has generally been bought in recent history.
The two big counter-vailing forces in our market provided opposite results, Materials +2.01%, Financials -0.31%.
Energy (XEJ) was the best performing sector, +2.89%. After two weeks of weakness, XEJ is back into a bullish move.
Here’s the Weekly Change chart:
We can see clearly here that Resources were the strength in this week’s market.
To put that into some context, here’s Sector Changes on a 12-Week basis:
Health has consistently been a top performer.
Gold is worth watching as it is moving into a seasonally favourable period.
Copper Futures:
Copper Futures surged +1.67% but ran into a bit of selling on Thursday.
The worst seems to be over for Copper.
Copper is often taken as a proxy for world economic health.
Our miners have been particularly resilient in the face of the fall in Copper.
XMM (Oz Metals and Mining). Daily Chart.
XMM up this week +2.7%. It still needs to get over horizontal resistance to prove its bullish credentials, but that looks a real possibility.
XXJ (Financials) Daily Chart.
XXJ is holding above the key 200-Day EMA. Although XXJ was down a little this week, it shows a three-day bullish reversal Wed.-Fri. so it might be OK. All bets are off it falls below the 200-Day EMA and horizontal support.
Other Charts of Interest:
XUJ:
XUJ on Friday bounced strongly off the 50 and 200-Day EMAs which were running in tandem. The worst may be over for XUJ.
XUJ is a small sector with only four stocks in the ASX100. All four were up strongly on Friday. The best looks to be APA.
XGD:
XGD has a very strong move up on Thursday, +3.46%. That took it into dual resistance, horizontal and the 50-Day EMA. It had a rest on Friday. Look to more upside in the near future.
XUJ and XGD were my two Charts of Interest in the previous week. It looks like they’re now paying off. Note: both tend to have defensive characteristics. That’s a warning note for the broad market.
SP500:
SP500 ran into problems on Friday with both Facebook and Twitter falling heavily. The chart shows a three-day reversal pattern Wed.-Fri. Expect more downside.
SP500 is in a medium-term wave pattern in a long-term up-trending channel. Expect a pull-back to the lower edge of the channel.
Major global stock markets are currently highly correlated, and Australia is in that group. So, if America can continues to fall, we should be tagging along. While resources continue to look promising, our market should be cushioned if it does fall.
(20min delay)