Australian Market. XJO - Monthly, Weekly, Daily Charts.
Sector Charts and comments on individual stocks.
Summing up.
AUSTRALIAN MARKET: SECTOR PERFORMANCES IN THE PAST WEEK.
XAO down -2.01%. Bad, but not as bad as the week before, then it was down -2.59%
Best two sectors were: Utilities +1.76% and Property +0.97%. Both are defensives. Plus, Bonds were up +0.2%. That's the ultimate bolt hole for defensive players.
Worst three: XIJ -4.56%, XXJ -3.39%, XDJ -2.86%. XXJ was affected adversely by the ex-dividend event in NAB on Friday. NAB fell -6% on Friday.
(One of the reasons for recent poor results for our market during November is the fact that three of the four big banks, NAB, ANZ and WBC, go ex-dividend in November.)
NEW HIGHS: Despite the doom and gloom, three stocks from the ASX100 made New 52-Week Highs. They were all in the Materials Sector (XMJ): RIO, ORI and FMG. It seems that that sector can do nothing wrong. Five stocks made 52-Week Lows. Three of those were the three Telecom stocks in the ASX100: TLS, TPM and VOC.
52-Week High Stocks remains below the 5-Week MA. Bearish.
STOCKS >200-DMA. 32.7% of ASX100 Stocks are above their 200-Day Moving Averages. This is a measure of the long-term trend in the market. This indicator continues to deteriorate. Bearish
STOCKS +VE SHORT TERM TREND. 14.3% of ASX100 stocks are positive on the short term trend measurement indicator, DPO. This indicator continues to deteriorate and is at its lowest level in the past six months. Bearish.
The past two week I have said: "Breadth figures are generally weak. It might be best to wait until these improve." This week continued a deterioration in the breadth figures. Wait.
XJO, Monthly, Weekly, Daily Charts.
Monthly Chart:
We're at the beginning of the month of November. So far this month XJO is down -2.57%. The Index is below all the MAs on this chart.
Three of the indicators on the above chart are now below mid-lines or zero lines.
It's too early to make any decisions based on this chart.
Weekly Chart:
XJO down heavily this week -1.95%. The Index is in a medium term down trend, and has broken marginally below its long term up trend. Caution.
Daily Chart:
I thought there was a high probability that the 200-Day MA would provide support for the index. Not to be.
This index is now extremely oversold with an RSI at 28.06.
We have a major support level nearby. That's at 5151.6. XJO now at 8180.8. It seems likely we'll get some action around that support level with the American election coming on Tuesday. Here's a scenario: If Clinton wins, we bounce upwards off the support level; if Trump wins we fall through support and look likely to test the next support level at 4986.8. (Say 5000 in round numbers.)
ASX 100 - STOCK RATINGS.
Momentum is one of those anomalies which throws doubt on the Random Walk Theory of Stock Markets.
As a general rule, avoid stocks in the weakest sectors, and look to stocks in the strongest sectors. (There are always exceptions.)
The following charts show the stocks from the ASX100 in each of the ten sectors. Relative Strength is a blunt instrument. Use technical analysis for entry to these stocks.
Remember that the following charts show "relative strength", i.e., strength of the indices and stocks compared to action in the XJO. Bars above the zero line do not necessarily indicate that a stock or index is bullish - only that it is doing better than the XJO.
SECTOR RATINGS.
These ratings should always be taken with a grain of salt. XDJ is the best performing sector in the past 12 Months. But it is now in a medium term down trend since early October. Materials (XMJ) is now the second highest rated sector. It is currently in a medium term sideways trend while most of the market is trending down. With three stocks from Materials making new 52-Week Highs, it's probably best to look for investments in that sector rather than Consumer Discretionary. XDJ's good performance was due to good performances earlier in the year, but it's run could be ending.
(This Ratings are a filtering mechanism, not a recommendation to trade.)
Health and Utilities, which are invariably the good performers in 2015 and most of 2016, have regained some upside momentum relative to the XJO. So they are also worth considering. Property may be joining that group. Watch these sectors.
UTILITIES
Utilities was up marginally this week. That's better than the broad market, but hardly strong.
AGL continues to be the best performer in this group. It fell on Friday week ago below the 200-Day MA, but has since rebounded strongly. It's worth considering once again.
On current prices, AGL pays a dividend of 3.8%. Other Dividends are: APA 5.4%, AST 5.8%, DUE 7.9%, SKI 5.4%. These are tempting dividends, but AGL is the only one with a reasonable stock rating.
Industrials:
In the Industrials Sector, Aristocrat Leisure (ALL) is the standout, Relative Rating at 1.04.
Seek (SEK) and Brambles (BXB) are both below their 200-Day MAs. Avoid.
Downer EDI (DOW) is an improver and is just off a 52-Week High. It's worth a thought. Look to buy-the-dip.
Dividends: ALL 1.5% is a growth stock, DOW 3.9% is worth considering.
Materials:
Materials was down this week -0.345%. It continues to improve relative to the XJO.
AWC is the best performer with a Rating of 0.65. It's been very strong but given up ground in the past week. FMG has also been going well, Rating: 0.59. It's been making consistent New 52-Week Highs.
Bluescope Steel continues as a good performer but slipping behind AWC and FMG.
Rio, FMG and ORI made 52-Week Highs this week.
FMG pays 3.6%. AWC pays 5.4%. ORI pays 3.1%. Rio pays 4.2%.
Financials X-Property:
XXJ is one of the poorer performing sectors on a one year basis.
In the four big banks, ANZ is hovering around the zero line, while the other three are clearly below.
CGF is the best performing stock and pays a dividend of 3.3%. It slipped away from a recent 52-Week High. Look to buy the dip.
The banks all pay healthy dividends, but until we see a turn around in their prices, the risk is a bit too high. CBA is in a long-term trading range - one for the traders, and perhaps for the Call Sellers.
Health and Information Technology:
Health showed its defensive qualities this week. Health up this week +0.26%.
Cochlear is the standout. It, too, is losing its shine. Down this week -1.49% after a rout the previous week. Wait for a rebound.
CSL has been very disappointing and is now well below its 200-Day MA. It may be setting up for a rebound. Wait.
None of the Health Stocks pays enticing dividends.
Note: Health has been the leading index for a very long time. When the leading index turns down, it's often a sign that a bull market is at or close to ending. XHJ has formed a large head/n/shoulders bearish formation. That could be a sign that the bull market is over, or at least heading sideways for an extended period of time.
Nothing in Info.Tech appeals.
Consumer Staples:
TWE is one of the best performers in the ASX100 on a 1-year basis. It was down this week -1.42% after a rout the previous week -7.67%. Wait.
WES was the pick of the two big retailers. It rose +0.2% this week after being routed like several other stocks the previous week. Then it was down -8.61%. Woolworths was down this week -5.24%. Neither WES or WOW looks appealing.
Consumer Discretionary and Telecomms.
Although a top rated sector, Consumer Discretionary continues to lose ground from its top in August. Down this week -2.86%.
Domino's is the best rated stock, but is below its 200-Day MA. So that's discounted.
The other good performers are JBH (dividend 3.9%) and HVN (5.8%).
Telecomms are depressing. It's the lowest rated sector. All three stocks made 52-Week Lows this week.
TLS might be interesting for its dividend 6.4%, but only if you intend to combine it with a call selling program to boost income.
Energy.
On a one-year basis, Energy is a dreary sight. I'm still optimistic about Energy's prospects but we need to wait.
WPL pays a dividend of 4.4%. Those dividends are not sufficient reason yet for buying the stock.
Property
Property showed its defensive qualities this week -0.97%. It's had a big fall in the past couple of months when it probably got ahead of itself. It may be getting ready to rebound - wait.
MGR is the top rated stock, but has fallen below the 200-Day MA. So it is discounted.
Westfield is in the lowest 10% of stocks on the ASX100. Avoid.
Summing up:
Our market remains in Risk-Off mode. It's hard to recommend much given the prevailing down trend in the market, but some of the Materials stocks are looking like probabilities.
This week defensives were the best performers. Utilities, Property and Bonds were all positive. They may be on the rebound, but we need to see more before being sure about that.
The big improver is Materials.
Materials is up against the 200-Week MA where it has found resistance in the past. Wait. A break through that resistance level would be very bullish for certain XMJ stocks and probably for our market as a whole.
Bread is poor. Until we see some improvement in the breadth indicators (see the first section of this report), it's best to wait on the sidelines.
The American election seems to hold the key. If Clinton wins, we go up. If Trump wins, we go down. But - whatever the result - the market will do what it wants to do. Don't think that the expected reactions will occur. Watch the charts.
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