The Australian market fell heavily this week, most notably because of a big fall in Financials (-4.53%). The coming week is a quiet one for economic news and company reports. With a resolution to the turmoil in Canberra, we may see a rebound in our market.
XJO Charts, Daily, Weekly, Monthly.
Internals – Australian Market.
Copper
Sector Charts
XJO Charts, Daily, Weekly.
XJO Daily:
XJO had a poor week probably exacerbated by the political turmoil in Canberra. It has now fallen from its directionless trend downwards to test the 50-Day EMA. This has been important for the XJO since it broke above the 50-DEMA back in late-April, 2018. It tested the 50-DEMA as support for several days back in late-May and early June. Until this week it has been well above the 50-DEMA. Friday’s action suggests the pull-back could be over.
The short-term Stochastic has now fallen below its lower Bollinger Band. A break back inside the BB would provide some upside impetus.
CCI is showing a similar profile.
Watch for a break back inside their respective BBs early next week.
XJO Weekly:
XJO was down this week -1.45%. This week’s candle is a bearish engulfing candle which may produce more downside.
The Bollinger Bands on the Stochastics aren’t showing the characteristic “squeeze” which often precedes a trend change, so the XJO could still be OK.
This chart clearly show that the medium-term and long-term trends are up.
XJO Monthly:
So far this month, the XJO is down -0.52%, with a week to go. The events of the past week have been the chief reason for the negative result, so far.
The coming week is a relatively quiet one with no key economic news scheduled.
Earnings season is also winding down with only four large-cap stocks reporting (CTX, BKL, BAL, RHC).
None of those are likely to produce market moving results.
We may be more influenced by overseas events this week than we’ve seen in recent weeks.
A handy reference covering company reports is available at:
The number of stocks in the ASX100 that are above their 200-Day MA is this week 66%, in the previous week 75% this week. This keeps the Index solidly in bullish territory, although falling.
Percent of ASX100 Stocks positive on the Directional Movement Index was down to 51.5%. That’s just barely in short-term bullish territory
Five out of 11 Sectors were up this week. That might seem surprising given the poor results this week, but absent from the positive sectors were the largest sectors, XXJ -4.53% and XMJ -0.58%. XXJ was clearly the worst performing sector in our market.
XXJ and XMJ are now both below their 200-Day EMAs.
Here’s the Weekly Change chart:
XTJ was the best performing sector for the second week in a row.
To put that into some context, here’s Sector Changes on a 12-Week basis:
XTJ is also the best performer over the past twelve week. Health has consistently been a top performer.
XMJ is the worst sector, but its fortunes may be about to change.
Copper Futures:
Copper Futures have been in bear market territory since the high in early June
Recent action in Copper suggests a short-term bottom is in. Things might get interesting, however, once it hits the 50-Day EMA. That’s the black down sloping line on the chart.
Expect a short-term rally in our miners in coming days.
(Copper is often taken as a proxy for world economic health.)
Sector Charts:
XUJ
XUJ (Utilities) was down this week -3.9% and is back below its 200-Day EMA. Give it a miss until we see some improvement.
XMJ
The recent bearish fall is clearly evident in this chart. XMJ is now sitting below the 200-Day EMA but holding at nearby horizontal support, so there is some hope for the index.
XMJ is now a long way down from its high set in mid-May.
Although XMJ is below its 200-DEMA, it is sitting on its 50-Week EMA, the next major EMA support.
Base Metals in the U.S. were up +2.57% in the past week. In the previous week Base Metals bounced strongly off a major horizontal support level, so the worst might be over for the price of metals. Our miners should be able to leverage off that.
BHP is one of the few miners still above its 200-DEMA. So it is worth a look if we see a bounce this week.
XDJ:
XDJ was up +0.67% this week. That’s a good result given the poor result for the XJO. It has been helped by some positive earnings reports (JBH, SGR, CWN, DMP, HVN). It was harmed by a poor result from FLT (Flight Centre).
XTJ:
XTJ has now risen above its 200-DEMA. The market likes what is happening with TLS and TPG. Analysts don’t know what to make of it.
We can’t argue with the market. Buy the dips in those two stocks.
XIJ:
XIJ is a small sector but has been performing well during earnings season.
XRO is the strongest stock but is currently way over-bought. Wait for a pull-back.
XEJ:
XEJ has been in pull-back mode since early August. Down this week -1.01%.
CCI has dropped below its lower Bollinger Band, then pulled back inside. That’s usually a fairly reliable guide to further upside.
Santos is the strongest stock, and had a big rise on Thursday after its report. Look to buy the dip.
XHJ:
XHJ is consistently the best performing sector in the XJO. This week it was up +3.14%.
Best performing stock is CSL.
I’m cautious about XHJ. The weekly chart looks to be in an exponential rise, and the Index is now sitting above its Standard Error Channel. That usually precedes a fall.
XSJ:
XSJ looks to have successfully tested its 50-Day EMA as support. Look for more upside.
WOW touched its 200-Day EMA on Thursday then bounced.
The strongest stock in the sector is Wesfarmers. It dipped this week, then found support at its 20-Day EMA, then bounced on Friday. Look for more upside.
XNJ:
XNJ is in a steady uptrend, up this week +0.27%. That doesn’t look much, but measured against the fall in the XJO, that’s a good result.
Strong stocks are ALQ, BXB, DOW, ALX and QUB. They’re all worth a look.
XXJ:
XXJ is down -4.53% this week.
It’s a bit hard to understand such a big fall this week, except to blame it on the events in Canberra.
Perhaps now that there is some resolution there, we can see a rebound.
XXJ was set up for a pull-back, but nothing like we saw this week. Expect a relief rally this week, but caution is required with most of the XXJ stocks.
Best in the XXJ seem to be QBE and MFG.
XPJ:
XPJ down this week -2.25%. It has pulled back to its 50-Day EMA where it has found support in recent times, so it might be OK. Look for a bounce here.
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