Our market had a modest rally this week, but Financials continue to drag. If XXJ can bottom out (likely) we should see a good rally in the XJO. Internals remain positive. Wait to see how this pans out.
CONTENTS
XJO Charts, Daily, Weekly, Monthly.
Internals - Australian Market.
Sector Watch
Summing Up.
XJO Charts, Daily, Weekly, Monthly
XJO Daily:
For several months, the 49 Day EMA has provided support. That support has been broken and the 13-Day EMA has had a bearish X-Over below the 49-Day EMA. Indicators have given short term buy signals (except for the MACD), but those buy signals are now in doubt with the bearish engulfing candle on Friday. The chart is locked in between the overhead resistance of the 13-Day EMA and horizontal support. Wait.
XJO Weekly:
XJO finished up this week, +0.42%.
The chart remains within the long term rising (bullish) Standard Error Channel. That's been in place since February, 2016.
The 13-Week EMA has been broken to the downside.
Indicators are on sell signals. Wait
XJO Monthly:
XJO down this month -2.91%. This has three trading days left to run
If the current configuration worsens just a little, we'll have a bearish monthly chart. CCI and RSI are both below their 5-Month Moving Averages. A little more downside would put DZ Stochastic below its 5-Month MA. The chart would show a bearish three-candle reversal coming at resistance. Wait.
INTERNALS - AUSTRALIAN MARKET.
XJO was down strongly this week, and that is reflected in the Internals.
First, the Sector changes for this week:
Looking at this bar graph, our market had a good week. The only major issue is with Financials (XXJ), but that makes up about 40% of our market. Only nine out of 11 sectors this week were positive. Two were negative. (XGD is not a sector, but a sub-industry). The best performer was Energy followed by Property. Given big falls in the Price of Oil on Thursday night, the run-up in Energy could be over.
The number of stocks in the ASX100 above the 200-Day MA fell marginally this week from 72% to 70%. This is a long term trend indicator and is currently sideways.
The Number of stocks positive on the Directional Movement Histogram rose this week from 40% to 53%. 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). It is now bullish - above the 50% level. This congruent with the action we've seen in the charts above. Clearly, the overall trend of the XJO is dependent now on Financials (XXJ).
SECTOR WATCH
We can see from this chart that Financials X-Property (XXJ) is obviously deteriorating. XXJ makes up nearly 40% of our market. So any deteriorating there is a problem. Look to improving sectors for best individual stock buys, (e.g., Cons.Disc, Info.Tech., Industrials, Property, Gold Miners.)
SECTOR CHARTS (Daily)
XMJ (Materials)
XMJ was up this week +0.4%.
The long-term trend remains down, but, significantly, XMJ has risen above its 200-Day MA. From early May, XMJ has outperformed XJO and is now above its zero line on the Mansfield Relative Strength. That's another plus.
This could still be a counter trend rally within the longer term down trend. Watch what happens if the XMJ gets up to the top of the Standard Error Channel.
XMJ is now on a short-term sell signal with four indicators below their 5-Day MAs
Iluka remains the strongest stock in the sector followed by Boral and Northern Star Resources ( a Gold Miner). ILU's Momentum reading is >2. Boral and NST both have a Momentum reading >1, which is a significant strength.
XEJ (Energy):
XEJ had a good week, up +2.13%. Friday's action looks bearish with an engulfing candle. Three out of four indicators are on short-term sell signals. It remains well above the 49-Day EMA, if that acts as support then the current uptrend may continue.
Caltex and Origin are the strongest stocks.
3. XXJ Financials X-Property:
XXJ had a poor week, -0.62%. It looks like it is trying to find a bottom, with that big reversal day providing long-suffering bulls with some hope.
The XXJ is now extremely oversold. RSI is <30. Stochastic <10. CCI has levelled out - showing a positive divergence.
This is set-up for a rebound.
The strongest stocks are all fund managers: Henderson, IFL and Magellan.
The four major banks are all on the far side of negative on the momentum chart. Westpac is the worst of them. CBA the best.
Wait until we see improvement before trying to buy these.
XUJ Utilities
XUJ is a consistent top performing sector. It's in a long-term uptrend, and currently in a short-term sideways trend. Support and resistance are clearly marked on the chart. Wait to see which way this breaks.
All AXS100 utility stocks are performing relatively well. SKI is currently the strongest performer.
XNJ Industrials
XNJ up this week, +2.07%.
Some of the strongest stocks in the ASX100 are in this sector. Momentum ratings: Qantas 1.88, Aristocrat Leisure (ALL) 1.32, and Cimic (CIM) 1.06 are the top momentum stocks. Buy these on any dips.
XSJ Consumer Staples
XSJ was flat this week, down -0.08%. It's in a trading range - so wait to see which way this breaks. More than likely we'll see a pop to the upside.
Treasury Wines (TWE) and Graincorp (GNC) are both doing well. GNC Mom. Rating: 1.39 is quite strong. TWE Mom. Rating: 0.62.
There's nothing much between the two big supermarket stores (WOW and WES) with WOW having a slight edge. Both pay good dividends. These are two for the long haul.
XHJ Health
Health up this week, +0.31% is in a solid long-term uptrend. It is consistently one of the best-performing sectors.
It may have topped out in early May. It has held above the 49-Day EMA but struggling to get above the 13-Day
EMA. Wait to see how this breaks.
CSL and COH are always worth a look. COH has a MOM rating of 0.77. That's the best of the Health Care stocks.
XPJ Property
XPJ up this week +2.12%.
It is bounced strongly from a War (or Congestion) Zone. That looks like the start of a strong rally
The shopping centre stocks remain a drag on the sector. The strongest stock is Goodman, Mom Rating, 0.79
XGD Gold Miners
XGD up this week +1.06%. It is currently in a sideways short-term trend. Wait to see if it can break above resistance.
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 up +0.8% this week. The past seven trading days has produced a lot of doji candlesticks with obvious tops and tails. That doesn't inspire a lot of confidence. It is struggling to get above the 20-Day MA (dashed line - middle Bollinger Band). But it has held above the 49-Day EMA. Wait to see how this breaks.
Harvey Norman, despite Gerry telling the shorters to "piss-off" continues to be under attack. Stay away.
It's not all doom and gloom in the XDJ. FLT has had a big move since early-April. It remains one of the strongest momentum stocks in the ASX100, Mom. Rating 1.29. It is currently in a short-term trading range. See which way it breaks.
The strongest momentum stock is Fairfax (FXJ) as the result of a take-over bid. Leave that to the professionals.
XTJ Telecoms.
Telecomm up this week +1.58%. The recent upside move by XTJ is probably a counter-trend move. Maybe not. It's one of the better-performing sectors in recent times, but I'd still like to see it get above the 200-Day MA before considering it.
Summing Up:
Our market finished up this week +0.42%. Nine out of 11 sectors were positive. Financials are the big drag on our market. XXJ seems to be trying to put in a "bottom". If it succeeds we should see a rebound in our markets.
Look to buy strong stocks in strong sectors. There are also some exceptional stocks in weak sectors.
(20min delay)