Australian Market: Weekly, Monthly, Yearly Performance Charts
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 up +1.25%.
Eight out of ten Sectors were up. The one big failure was Energy, down heavily -4.27%. Consumer Stocks dominated the positives. Staples +2.79% and Discretionary +3.34%
This week 30 Stocks from the ASX100 made New 52-Week Highs. That's down marginally from 32 Stocks the previous week.
84.8% of ASX100 Stocks are above their 200-Day Moving Averages. That's exactly the same as the previous week. That's an extremely bullish figure and into very overbought level. As a contrarian, that rings loud alarm bells.
93.9% of ASX100 stocks are positive on the short term trend measurement indicator, DPO. That puts the reading into the extremely overbought region and is the highest reading since I began record keeping over two months ago. A sharp fall followed that reading on 13 May. We're still not seeing any drop off.
Results for July, 2016:
XAO up +5.92%. All sectors were up. The worst performer was Energy +0.15%. The best sector performers for the month were again the Consumer Stocks: Staples +7.87% and Discretionary +8.23%. Bonds was the only weakness, down -0.76%. That's not to be unexpected in a strong bull market where money rotates out of safety and into riskier assets such as stocks.
On a one-year basis, the strongest sectors relative to the XJO are Health, Consumer Discretionary and Utilities. All three of those Sectors hit 52-Week Highs this week. Industry Groups, Gold Miners and Property are also strong. The worst performers are Telecomms, Energy and Financials.
Look for trading opportunities in the strongest sectors and avoid the weakest sectors. (There are always exceptions. See below for more details.)
XJO: Monthly, Weekly, Daily Charts.
Monthly Chart:
This has been a very bullish month. The July Candle is above the 20-Month MA and the 3 Month MA is above the 20-Month MA. RSI, CCI and short term Stochastic (14.3.5) are above their mid-lines. The very long term Stochastic (50.10.10) has also turned up. Looks good.
Major horizontal support lies at 4987. The Index closed on Friday at 5562.3
Weekly Chart:
XJO up this week +1.17%.
The medium term uptrend is up. This week the index nudged marginally above horizontal 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) is overbought at 89 and has flattened out. The RSI is at 72.4 this week - overbought. CCI is now dropping below 100. The market is overbought and power in this rally is clearly dropping off, but any pull-back is likely to be bought.
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 up this week +0.96% and set a new 52-Week High. It 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 0.77, it is one of the best performing stocks in the ASX100. On current prices, AGL pays a dividend of 3.2%. All the ASX100 Utilities stocks except AGL set new 52-Week Highs this week. An exceptionally good performance. Dividends are: APA 4.1%, AST 4.9%, DUE 6.5%, 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 1.47.
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 3.4%. Sydney Airports also pays a solid dividend of 3.7%.
Three other stocks besides Aristocrat made 52-Week Highs this week: BXB, SYD and QUB. Anything making a new 52-Week high is worth thinking about.
Materials:
Materials was up +1.58%
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, CSR, FMG, JHX, Orora. FMG is the only miner in that group.
On current pricing, ABC pays 3.8%, ORA pays 2.9%, CSR +6.2%. 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 3.2%. 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 and made a 52-Week High this week. Cochlear is the standout and set a new 52-Week High this week. Five stocks made new 52-Week Highs: Cochlear, CSL, Resmed, Ramsay Health and Sonic.Sonic (SHL) pays a dividend of 3.1%.
Carsales.com (CAR) is clearly a standout in Info.Tech. Dividend Yield 2.8%. CPU is just off a 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 -1.93%, and that comes in a generally strong market. 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 had a great day on Monday, up >8%. It then sold off the rest of the week. It may be in the throes of a trend change from down to up. Monday certainly took it above the down trend channel it's been in for many months. That action also took it above its 200-Day MA. It's now back to a strong horizontal support line. If it can bounce here, it could well be a spec buy. If it falls back below that support line, I'd continue to avoid it.
WOW Dividend is 4.8%. 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, up 3.34%.
Four stocks made 52-Week Highs: DMP, Star Entertainment, Fairfax 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.
Fairfax pays 4.3%. JBH pays 3.6%
Telecomms are interesting. Telstra remains enticing to the dividend hunter: dividend +5.4%. 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 performed reasonably well early in 2016, but since then has been in a sideways trading range. In the past week it fell away on a generally strong market. I had a look at two Dow Jones 30 stocks this week which performed in an optimistic manner on Friday: Exxon and Chevron. If they can continue the good work, we might see a resurgence in our Energy Sector. Just don't bet on it until we see a significant break out of its trading range.
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 five stocks made 52-Week Highs: Dexus, Goodman, Scentre, Stockland and Westfield. 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 American market has been in a highly unusual and lengthy consolidation which looks like a rounding top, particularly on the SP500.
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 down from a neutral position, suggesting that we're now in Risk-Off territory. Under such circumstances it would be hazardous to go chasing for stock market gains.
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:
Our market is short term overbought with an RSI.14 of 72.43. July has been a great month for our stock market, up +6.28%. Participation has been high with 84.8% of stocks in the ASX100 above their relevant 200-Day MAs for the second week in a row. That should ring alarm bells, as above 80% is a contrarian sign that a move down is likely. Too bullish is bearish.
Other breadth measures such as % of Stocks +ve on the DPO are at very high levels. They are higher than we saw in May just before a steep sell-off.
The three strongest sectors in our market on a yearly basis are: XUJ, XDJ and XHJ. On a weekly basis XUJ has an RSI.14 of 79.6. XDJ is 74.4 and XHJ is 70.8. These are all overbought, XJU exceptionally high. It would seem unlikely that the leaders have much more air-space above them to rise higher.
Risk-On/Risk-Off indicator on the American market is now in Risk-Off.
It sometimes takes major turning points to develop much longer than we might expect. This could be one of those times. But, it would be, in my view, a courageous person to plonk down a lot of money into this market at this time. A better buying opportunity will present itself again in the near future.
(20min delay)