Weekend Chat and charts, page-2

Weekly Wrap. Week ended 19/2/21. Oz market fell again this week.

XJO down this week, -0.19%. That's not a big fall in the weekly charts.

A big fall on Friday (-1.34%) took the market into negative territory. Here's the daily chart:

Friday's fall switched the Triple Trend-Lines from Bullish to Neutral.

Some short-term sell signals are appearing in this chart. XJO has broken below its Trigger Line (8-Day EMA). Hull MA13 has switched from up to down. All three indicators in the lower panels are giving short-term sell signals.

Friday was a seven-day low, which, in a medium-term up trend, suggests we'll see more upside in the next day or so.

The 50-Day and 200-Day MAs remain bullish.

One-Week Sector Changes.

Only two sectors were up this week. Financials (XXJ +0.49%) and Materials (XMJ +1.83%). XXJ and XMJ are the two biggest sectors in the market making up about 45% of the market. So it is no surprise, then, that the market only fell -0.19%.

The three worst performing sectors were all Defensives: Utilities (XUJ) -4.13%, Consumer Staples (XSJ) -3.17%, Property (XPJ) -3.19%.

My Aggression Indicator (XMJ/XSJ) remains above the 20-Day MA, i.e., favouring aggression over defense. The important panel here to look at is the bottom panel. This shows the relative strength of XMJ (Materials) compared to XSJ (Consumer Staples).

Last week, 8 stocks made the Strong list. This week 12 stocks made the list. The bench-mark low is 3. So breadth improved a little this week but not significantly. (The High bench-mark is 44 stocks.)

Only this week, I've started accounting for the number of weak stocks in the ASX100. Last week, nine stocks made the list. This week, 10 stocks made the list.

Large Cap Stocks with Low Volatility

Stocks picked last week were: MQG, NAB, WBC. All banks. Results: MQG -1.4%, NAB +0.72%, WBC +8.81%, Average: +2.71%. That's well above the XJO result of -0.19%.

This week, only two stocks meet the criteria: WBC, ANZ. Sell if they fall below the 20-Day MA.

Experiment:

Twelve weeks ago, I started an experiment - an experiment in medium-term momentum. As of 27/11/20, I'd buy (hypothetically) the best three performing stocks from the three top performing sectors in the past three months, and hold them for the next 12 weeks. We have four weeks to go in the experiment

The stocks would be: BEN, VUK, CGF, BPT, WOR, OSH, and TLS. (Telecommunications is a small sector and there are not three candidates available.)

Here are the results for the twelve weeks of the experiment: BEN +10.58%, CGF +11.17%, BPT -12%, WOR -21.14%, TLS +6.09%, VUK +29.49, OSH +10.96%. Average: +5.02%. That's still ahead of the XJO figure for the past twelve weeks of +2.09%. Extrapolating that to 48 weeks (about a year), we have a gain of 20.08%.

Performance could easily be improved by have a "sell" option on stocks if they fell below the 20-Day MA.

I'll begin the experiment again next week and introduce the new "sell" option to cut down on losses.

At this stage, the best three sectors for the past three months are: XDJ, XTJ and XIJ.

Conclusion: Seasonality for 2021 suggests it will be a poor year for stocks. Keep that in mind.

The current medium-term trend of the XJO is up. The short-term trend is weakening with short-term sell signals on several indicators.