Weekly Wrap - Week ended 2/8/24. Global Markets pulled back this...

Weekly Wrap - Week ended 2/8/24. Global Markets pulled back this week. Worst results in nearly two years.

QQQ, ETF for the Nasdaq

QQQ (Nasdaq) is in a strong down-trend travelling below the lower edge of my short-term Bollinger Bands (10/0.8). Friday had some intra-day buying with a small body on the candle, so bulls were taking some interest.

Positive divergences are showing up on RSI and Force Index, so momentum is slowing - although it doesn't feel like it.

Force Index spiked down sharply - that's often followed by a rebound.

It's possible we'll see a rebound here back up to the 10-Day MA (centre line of the Bollinger Bands), but we'll probably then see a resumption of the downtrend.

Dow Jones

The Dow Jones Index hasn't been as bearish as the Nasdaq but, now, on Thursday and Friday has fallen strongly.

Force Index has spiked down - after which we usually see some effort to return to the mean, i.e., a rebound.

Watch for positive action on Monday night in the us.

STW tracking ETF for the XJO

Wednesday and Thursday saw a test of the recent high and the index has retreated strongly on Friday. XJO was down -2.11%.

With such a poor performance in the U.S. on Friday night, we can expect another big down day on Monday. ASX Futures are down -1.46%.

That suggests that the retracement zone marked on the chart below will come into play. There's plenty of support in that area - so we might then get a bounce to the upside.

ASX Sector Performance - Reality Check

Despite the carnage at the end of the week, XJO was up0.28% for the week, and eight out of eleven sectors were up.

Best performers were Telecoms (XTJ +2.14% and Information Technology +1.93%. Both of those are interest rate sensitive sectors.

People may be forgetting after two terrible days on the American market that the Federal Reserve is signalling a probable interest rate cut in September.

Interest rate cuts are usually inversely correlated to the stocks market. Interest rates cuts - Stock market goes up.

The market was spooked at the end of the week by poor economic news with poor imployment figures and poor manufacturing figures.

Oh how quickly the market forgets the Federal Reserve's good news which only happened on Wednesday.

I think we'll see the bulls back in the market in the near future.

Footnote: The market commentators have often noted that the current pull-back was in 2022. They seem to have conveniently forgotten that the 2022 pull-back was the started by an increase in interest rates, not a decrease.

Take care.