We saw some “green shoots” this past week. But … the XJO remains in a range. Until that range is broken, one way or the other, long term investors should wait on the side-lines. Day Traders and Swing Traders should have a ball.
CONTENTS
XJO Charts, Daily, Weekly, Monthly.
Internals – Australian Market.
Sector Charts.
Summing Up.
XJO Charts, Daily, Weekly, Monthly
XJO Daily:
The short-term trend is indecisive. The chart has bounced off the 200-Day MA – and bounced off that several times. Indicators are on short term buy signals. Until the current range (5670-5820 round numbers) is broken one way or the other, its best to sit on the sidelines unless you’re a day trader or swing trader.
XJO Weekly:
XJO finished up this week, +1.08%. The long-term trend is up, but the Index is at the lower edge of the bullish Standard Error Channel – which corresponds, more or less, with the lower Bollinger Band and the 49-Week MA. That suggests we could move up from here. Indicators suggest the medium term trend is on the cusp of a possible move to the upside. A decisive break below the 49-Week MA would suggest more downside. Wait
XJO Monthly:
This is the second week of July, XJO up +0.76%. Momentum indicators are all flashing bearish signals (below their 5-Month MA). It’s still too early in the month to make any long term decisions based on just this week.
The big challenge for the XJO is, in round numbers, 6000. XJO needs to get over that to maintain this bull market.
INTERNALS – AUSTRALIAN MARKET.
First, the Sector changes for this week:
Eight out of 11 sectors were up. XEJ (Energy) was the best performer +2.73%. The three negative sectors (XTJ, XHJ,XPJ) are all defensives. XDG (Gold Miners) was also weak – it tends to be a defensive.
The worst performer this week was again Health -1.08%.
Although not much should be read into one week’s data, the structural changes this week are positive.
The number of stocks in the ASX100 above the 200-Day MA rose marginally this week from 59% to 60% That’s still in bullish territory, but the trend is down.
The number of stocks positive on the Directional Movement Histogram rose from 33% to 50% and sits right on the border between bullish and bearish. This is a shorter term trend indicator and can move more rapidly, week to week, than the long-term indicator (stocks above the 200-Day MA). This data is again saying: Wait.
SECTOR CHARTS (Daily)
XMJ (Materials)
XMJ was up this week +2.71%.
XMJ is in a short-term uptrend. It has formed a bullish double bottom. The 13-Day MA has crossed above the 49-Day MA. Those are all bullish events.
The Index is outperforming the XJO.
Bluescope Steel (BLS) remains the best performer with a short-term momentum (MOM) rating to 1.5 from 1.27. Anything with a MOM Rating >1 is worth a look.
In a turn-around, the weakest stocks momentum stocks are not base metal miners (ABC, CSR, JHX, Ncm, NST) Miners >0.5 momentum are BHP, FMG, ILU, Rio. Those are not particularly strong but are improving. Watch.
XEJ (Energy):
XEJ had a positive week, +2.73%. It’s been in a steep downtrend before that. Indicators are showing some nice positive divergences and some short-term buy signals.. This might be OK for short term traders.
Energy tends to be volatile. I’d leave it alone until we see further developments.
3. XXJ Financials X-Property:
XXJ up this week +1.63%. XXJ is in a gentle up sloping channel.
It remains, however, below the 200-Day MA. A break above that with a bullish 13/49 x-over would be bullish.
The strongest momentum stock is IAG with a MOM Rating of 0.72. The next best stocks are BOQ and Suncorp. That represents an interesting change. Previously, the fund managers have been the out-performers in this Sector. We may be seeing a switch into more risky assets.
In the four big banks, CBA is performing best. ANZ and Westpac moved into positive territory on the MOM ratings. Still not strong, but, again, we’re seeing a shift in sentiment.
XUJ Utilities
XUJ has been a consistent top performing sector, but is now in a downtrend, this week +0.29%. XUJ may be forming a large rounding top. The 13-Day MA has had a bearish cross below the 49-Day MA. Indicators are now flashing short-term buy signals. Given the structure of the chart, any upside is likely to be limited.
The 200-Day MA beckons.
No stock is performing well. Wait and see how this goes.
XNJ Industrials
XNJ was flat this week, +0.08%. Like XUJ, XNJ was a good performer, but short-term it has turned bearish. The Index is now back to a major horizontal support level. Indicators are turning up enough to suggest that XNJ could bounce here. Watch.
A couple of the strongest Momentum stocks in the ASX100 were in this sector but have now turned down. Qantas was the best performing momentum stock in the market, but suffered a big fall this week, -5.72%. Qantas is leveraged to the Price of Oil. When oil falls, Qantas does well. And vice versa. So this could be a pointer to Oil doing well in the near future.
XSJ Consumer Staples
XSJ had a solid week, 2.29%.
XSJ has broken out of its sideways trend. That’s a bullish event. The big retailers (WOW, WES) have been affected recently by the threat of Amazon entering our market. They may now be shrugging off that negative sentiment.
Indicators are giving short term bullish signals.
WOW still has a clear edge over WES. If you must have one of the two big retailers, WOW is preferred. XHJ Health
Health down this week, -1.08%. That’s the third week in a row where XHJ has suffered substantial falls. It has consistently been one of the best-performing sectors, but investors might be rotating out of this sector. Technically, the chart suggests that the fall might be over. Until we see signs of improvement – Avoid, but don’t count it out.
XPJ Property
XPJ had another fall this week -0.65%, but downside momentum is slowing. Indicators are showing positive divergences, so we might see some upside in the near future.
Only one stock (LLC) in the Property Sector remains positive on the Momentum scales. Forget about Property until we see some definite signs of a turn-around.
XGD Gold Miners
XGD down this week -0.44%. It fell heavily on Friday -2.19% just as most of the market was improving
We’re in a seasonally favourable time of the year for Gold. So I’m looking for a solid up move in the Gold Miners. Many factors can affect the POG. Currently, with the Fed on a move to raise interest rates – that’s a negative for Gold. So, be careful.
This is a volatile industry group with a lot of small cap companies. Good traders can make money here, but it’s not for investors – unless they’re convinced we’re entering a secular bear market when Gold tends to outperform.
XDJ – Consumer Discretionary.
XDJ finished up for the week +2.44%. It remains in a range. Watch which way it breaks.
Flight Centre is currently one of the Stock Market’s darlings. MOM Rating 1.62. It is now consolidating and could fall. Watch.
XTJ Telecoms.
Telecomm is in a tight sideways trend (with a slight downside bias). It was down this week -0.36% That sideways trend has lasted over two months.
Anything can happen here.
Summing Up:
The past week has been strong, but not especially strong. XJO up +1.08%. Plenty of “green shoots” were seen with lots of stocks and sectors breaking short-term upside resistance levels.
The XJO, despite this week’s good performance, remains range bound. This is a market for the day traders and the swing traders.
On the positive side, the XJO remains above the divide between bull/bear markets, i.e., the 200-Day MA.
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