I'm becoming more optimistic about the near-term future of our market. It will all depend on how the Resources trend next week. Copper still hasn't reversed its falls, but plenty of indications exist which suggest that will happen. That would be a big plus for our miners which have been resilient in the face of big falls in metals prices.
Global markets are currently highly correlated. SP500 recently broke above horizontal resistance and seems likely to head higher. If that happens, we'll go along for the ride.
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 has been in a directionless trading range for about one month, 6136 to 6286. The index is currently at 6285.9, 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 +0.28%.
This chart clearly show that the medium-term and long-term trends are up.
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 early 2016. 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 is up marginally this week, 73% in the previous week, 73.7% 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 71.7% to 74.7%. This indicator continues to improve and is not yet overbought.
Seven out of 11 Sectors were up this week. The worst result was in the Energy Sector -2.21%.
The two big counter-vailing forces in our market provided opposite results, Materials -1.16%, Financials +1.02%.
XNJ was the best performing sector, +1.71%
Here's the Weekly Change chart:
We can see clearly here that Resources were the biggest drag on the market.
To put that into some context, here's Sector Changes on a 12-Week basis:
Health has consistently been a top performer.
Copper Futures:
Copper Futures have fallen almost -20% since their high in early June this year.
Many things about this chart suggests that the fall is coming to an end. But don't jump the gun. More evidence is needed. Wait until we see a definite upside trend movement.
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.
While copper is down about -20%, our miners are down about -6% Miners. Mining stocks often leverage falls in the price of the underlying materials. That's not operating in this case. Mining investors appear unusually optimistic that metals will rise in price and are discounting the recent falls. That's highly unusual. Look for a rise in metals prices, and a break-out to the upside by our miners. With XXJ returning to some strength, that could mean a strong bullish rally in our market. But - wait for confirmation
XXJ (Financials) Daily Chart.
XXJ is holding above the key 200-Day EMA. That's a sign of strength in this sector which was the biggest worry for our market. Plenty can still go wrong here, but XXJ now looks to be climbing the proverbial "Wall of Worry". While it remains above the 200-Day EMA, all's well. A decisive break below - all bets are off.
Other Charts of Interest:
XUJ:
XUJ recently fell heavily after hitting major horizontal resistance.
The Heiken-Ashi chart shows the sector stalling at the 200-Day EMA. A strong bounce here should result in more upside.
XGD:
Over the past two weeks, the Gold Mining Index (XGD) has fallen heavily and is now back to the long-term trend indicator, the 200-Day EMA. No slowing in the descent is showing in this chart. If, however, we see a stabilisation and then a bounce, the Gold Miners are worth a look.
SP500:
It was Options Expiry in America on Friday. That is usually a narrow-range day, and this Friday didn't disappoint.
Early in the week (and end of the previous week), SP500 broke above important horizontal resistance. I see no reason why SP500 shouldn't continue to rise and test the next level of resistance.
Major global stock markets are currently highly correlated, and Australia is in that group. So, if America can continue to rise, we should be tagging along.
(20min delay)