Australian Market. XJO - Monthly, Weekly, Daily Charts.
ASX 100 - Stock Ratings
Top Ten Stocks
American Market, Risk-On or Risk-Off?
Summing up.
AUSTRALIAN MARKET: SECTOR PERFORMANCES IN THE PAST WEEK.
XAO down -1.03%.
Two out of ten Sectors were up. Energy +1.97%. Materials +1.36%. Worst two were Health -2.66% and Utilities -2.11%. Can you make any sense out of that? I can't. The export oriented cyclicals were the strongest, while two key Defensives were weakest - in a market that was overall down. In a weak market we expect Defensives to perform relatively better and export cyclicals to perform worst. Weird.
This week 23 Stocks from the ASX100 made New 52-Week Highs. That's down marginally from 30 Stocks the previous week.
86.9% of ASX100 Stocks are above their 200-Day Moving Averages. That's actually an increase over the previous week, despite the overall market result. That's a bullish result as it means that the market was pulled down by a relatively small number of stocks, but breadth was relatively sound.
85.9% of ASX100 stocks are positive on the short term trend measurement indicator, DPO. That's down on the previous week, but still showing a strong bullish number.
Summing up: Despite the fall in the overall market index (XAO) the market internals suggest a surprising underlying strength.
XJO, Monthly, Weekly, Daily Charts.
Monthly Chart:
It's far too early to make any judgements based on the Monthly Chart. At this stage we've had a small down week, but everything else remains bullish.
Weekly Chart:
XJO down this week -1.17%.
The medium term uptrend is up. This week stalled at resistance.
Major indicators still don't show negative divergences which usually come before a down turn. Short term Stochastic (14.3.5) is overbought but the long term Stochastic (50.10.10) still hasn't reached overbought levels. Any pull-back is likely to be bought.
Daily Chart:
Short term Stochastic (14.3.5) has fallen from overbought levels. The chart is hovering above the Super Trend Line and the 20-Day MA. I'd expect a solid up move from here.
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.
Utilities.
Utilities was down this week -2.11% and even though it set a new 52-Week High. That occurred early in the week. The fall back in the latter part of the week seems to be related to the RBA decision on interest rates.
That's a bit perverse, as I'd expect Utilities to benefit from falling interest rates. But - that seems to be part of the weirdness infecting our market this past week. This may be a case signalling a bull market.
Despite all that, XUJ continues to be one of the better performing Sectors, if unspectacular, on a one year basis. It tends to be a steadfast defensive sector. The stand-out is AGL. With a Relative Strength of 0.73, it is one of the best performing stocks in the ASX100. But, AGL is now being challenged by AST for Top Dog in this sector. AST has a relative strength of 0.7. So it's not far behind.
On current prices, AGL pays a dividend of 3.2%. All the ASX100 Utilities stocks except APT set new 52-Week Highs this week. An exceptionally good performance. Dividends are: APA 4.3%, AST 5%, DUE 6.6%, SKI 4.6%.
Industrials:
The Industrials Sector is home to some of the better performing stocks on the ASX100. Aristocrat Leisure is the standout and set a new 52-Week High this week. Relative Rating 1.2.
Blackmores looks good but that's due to a great performance early in the year. Blackmores is now below its 200-Day MA, so ignore it.
Aristocrat is the best performer. Transurban, Seek, Sydney Airports and Brambles are all performing well. TCL (Transurban) pays a solid dividend of 3.5%. Sydney Airports also pays a solid dividend of 3.8%.
Three other stocks besides Aristocrat made 52-Week Highs this week: BXB, Downer EDI, SYD, TCL and QUB. Anything making a new 52-Week high is worth thinking about.
Materials:
The two best performers are non-miners: Bluescope Steel and James Hardie. Both are building materials companies and riding the property boom. FMG continues to perform well and is the best of the Miners.
The following stocks made 52-Week Highs this week: Adelaide Brighton, Bluescope, Boral, S32. S32 is the only miner.
On current pricing, ABC pays 4%, Boral pays 2.9%. None of the top performing miners pays a good dividend.
Financials X-Property:
XXJ is one of the worst performing sectors on a one year basis. The four big banks are all on the negative side of the ledger. Forget about the big banks until we see some solid improvement.
CGF is the best performing stock and pays a dividend of 3.4%. CGF is a fund manager.
ASX made a new 52-Week High and pays a dividend of 3.9%. It's an improver and worth a look.
The banks all pay healthy dividends, but until we see a turn around in their prices, the risk is a bit too high.
No stocks from the Financials X-PTY makes it into my Top Ten Stocks.
Health and Information Technology:
Health remains the best performing Index. But technically it looks vulnerable to further downside moves.
Cochlear is the standout and set a new 52-Week High this week but then fell sharply. Three stocks made new 52-Week Highs: Cochlear, Resmed and Sonic (SHL) which pays a dividend of 3.2%.
Carsales.com (CAR) is clearly a standout in Info.Tech. Dividend Yield 2.9%. CPU set a new 52-Week Low. Avoid.
Consumer Staples:
TWE is one of the best performers in the ASX100 on a 1-year basis. It performed poorly this week, down -3.52%. I'd be wary about entering TWE at this level, but watch. It has been such a good stock it could easily come good.
WES is still the pick of the two big retailers, if you must have one in your portfolio. Wesfarmers yield is 4.7%.
Woolworths looks like it could be turning around. It was flat this week in a down market. That action also took it above its 200-Day MA. I still don't like it. I'd like to see more positive results before buying into this as a turn-around story.
WOW Dividend is 4.7%. That puts it on a par with WES as far as dividends is concerned.
Consumer Discretionary and Telecomms.
Consumer Discretionary made a new 52-Week High this week, but finished down -1.94%
Three stocks stocks made 52-Week Highs: DMP, Star Entertainment and JB Hi-Fi.
DMP is the stand-out. I've been nervous about the status of DMP, but there's no doubting its price trend.
So it seems to be OK.
JBH pays 3.6%
Telecomms are interesting. Telstra remains enticing to the dividend hunter: dividend +5.5%. It is now at the top of its trading range and may be due for a pull-back. It remains a poor performer on a one-year basis.
VOC and TPM are both performing well, but are growth stocks.
Energy.
On a one-year basis, Energy is a dreary sight. It continues to act in a volatile, erratic manner. Until we can see a strong up trend established, it's best to avoid.
Property
Property is an industry group in the Financials Sector, but is worthy of standing alone for analysis. On a one year basis, it is one of the better performers in our market. Most of the stocks are performing well. This week three stocks made 52-Week Highs: Dexus, Goodman and Stockland. All stocks in the sector pay dividends better than 3% so are worth a look, with the exception of LLC which is performing poorly.
A cost effective entry to the sector is provided by ETFs such as SLF. Dividend Yield: 3.2%. It went ex-dividend on 29 June. Dividends are paid quarterly.
American Market: RISK-ON/RISK-OFF
Major turning points in the American market often result in correlated turns in most world markets including Australia. The above chart shows the relationship of 10-Year Treasuries (TNX) to 30-Year Treasuries (TYX). When TNX underperforms TYX, it usually results in a Risk-Off market. The chart for TNX:TYX has decisively turned back up from below the 50-Day MA. A double bottom has formed which is a positive.
At this stage, the Ratio is in Neutral, but looking prospectively positive. It needs to get back above the down trend line shown on the chart, and, preferably, above the 200-Day MA.
TOP TEN STOCKS FOR AUGUST:
The Top Ten Stocks for July returned +10.739% while the XJO rose +6.28%. So far, in the past three months, the Top Ten has consistently and significantly beaten its benchmark, the XJO. The best performer in the Top Ten for July was Bluescope Steel, up +32.65%. The worst performer was Treasury Wines, up +4.55%.
The Top Ten Stocks for August are unchanged from July. The stocks are: TWE, AGL, Cochlear, MGR, DMP, VOC, JHX, BSL, ALL, TPM.
Summing up:
The market was down this week, but a lot of the internals were weird. That may or may not be a positive. I really don't know.
There's no doubt that the market has come off its overbought levels and that could mean we'll see more upside.
Breadth measures are still bullish. (See the comments above on DPO, 200 Day MA, Stocks making 52-Week Highs.)
The three strongest sectors in our market on a yearly basis are: XUJ, XDJ and XHJ. Look to those sectors for buying opportunities. But - there are always exceptions.
Risk-On/Risk-Off indicator on the American market is now in Neutral.
In my daily report yesterday, I suggested we would see more upside which will probably result in a top for this market. It is a market to sell into, not to buy.
(20min delay)