Short Term Trading Weekend Lounge: 19-21 Oct, page-41

Weekly Report.

The Australian market regained some ground this week, up +0.74%, but the medium-term trend remains down.  We may see more upside – but any more upside should be treated as a counter-trend move until proven otherwise.

This week I’ve included a qualitative assessment of each sector (Bullish, Bearish, or On the Cusp of a Trend Change).  Gold Miners (which isn’t a sector but an industry group) is the only index given a Bullish rating.  Four Sectors are Bearish (but on the Cusp of a Trend Change):  XUJ, XDJ, XTJ, XPJ.  All other sectors have been given a Bearish rating (Energy, Consumer Staples, Info.Tech, Health, Financials, Materials, Industrials.). These ratings are not set in stone and can change quickly.  In general, buy strong stocks in the strongest sectors.  Note:  strength is currently located mainly in defensive sectors.

• XJO Charts, Daily, Weekly, Monthly.
• Internals – Australian Market.
• Copper
• Sector Charts.

XJO Charts, Daily, Weekly.

XJO Daily:

XJO has bounced off the lower level of the Standard Error Channel.

Indicators suggest further upside in the short-term.  Medium term – the trend is down.

XJO Weekly:

XJO had a positive week, up +0.74%.  The “hanging man” candle this week suggests buying pressure.  We need to see further upside next week to confirm.

The Long Term Trend remains up – but is barely hanging on.

XJO Monthly:

XJO is into the third week of October.  It is down -4.32% so far this month.

Both the short-term Stochactic and RSI are on sell signals.

The very long-term trend remains up.

INTERNALS – AUSTRALIAN MARKET.

Despite the positive week this week in the XJO, Internals remain weak although they have shown a little improvement.  The number of stocks in the ASX100 that are above their 200-Day MA rose from 29% the previous week to 37% this week.  That remains  bearish,

Percent of ASX100 Stocks positive on the Directional Movement Index rose from 10% to 24.2%.  That remains bearish.  The % of ASX Stocks above their 50-Day EMA rose from 14.1% to 21.2%.  That remains bearish.

We need to see more improvement in the internals before being confident that the market has turned around.

 

Eight of the 11 Sectors were up this week.  The three strongest sectors were Consumer Discretionary +2.68%, Tele Communications +2.18% and Property +1.91%.  Two out of three of those sectors are defensives.  The worst performer was the important Materials Sector -0.91%.  The Gold Industry Group (XGD) did exceptionally well, up +2.94%.  XGD is benefitting from the safe-haven status of Gold.

Things are not quite as Crook in Tullarook, but we need to see more improvement yet.

Copper Futures:

Copper is in a consolidation pattern above the old double bottom.  Such action usually implies a break to the upside.  This should bounce here, but still needs to get above the 200-Day EMA to prove bullish.  We still don’t have “buy” signals on the indicators.

SECTOR CHARTS

XMJ (bearish):

XMJ was down this week, down -0.91%.  So far it continues to respect horizontal support but finished the week marginally below the 200-Day EMA.   RSI is still in the do-not-buy zone, but close to giving a buy signal.  A rise above the lower band shown on the chart would give a buy signal.

The two strongest stocks are both gold miners, NST and EVN.  Newcrest (NCM) also improved this week.  After the gold miners, S32 and Rio are the strongest stocks.

XEJ (bearish):

 

XEJ was up this week, +1.06%.  The chart pattern looks like a bear flag.  Treat with caution

On the plus side, XEJ remains above its 200-Day EMA.

Whitehaven Coal is the strongest stock.

XIJ (bearish):

XIJ is consolidating below the double top marked on the chart.  That consolidation is opposite an old congestion zone.

On the plus side, it remains above the 200-Day EMA and horizontal support.

A break out of the current consolidation will determine future direction.

CPU and LNK are both worth a look.

XXJ (bearish):

XXJ had a good week, up +1.17%.  But it is a long way below its 200-Day EMA, so this is probably a counter-trend move.  There may be trading opportunities here – but generally left alone for longer term investors.

The two strongest stocks are CGF and QBE.

XUJ  (bearish but may be on the cusp of a trend change):

 

XUJ (Utilities) rose this week +1.45%.  It remains below the “cloud” and below the 200-Day EMA.  Short-term indicators are on “buy” signals.  This may be a counter-trend rally.

Ausnet looks to be the best opportunity in this Sector.

XDJ  (bearish but may be on the cusp of a trend change):

XDJ up strongly this week, +2.68% and regained its place above its 200-Day EMA.  The weekly candle (not shown) is a bullish engulfing candle.  Short-term Indicators are on “buy” signals.

Last week I stuck my neck out and nominated DMP (Domino’s) as my stock of the week.  It was up +4.26%.  More upside seems likely.

XHJ (bearish):

XHJ remains hovering at the 200-Day EMA.  It was down a little this week, -0.36%.

The Bollinger Bands on the Stochastics have squeezed tightly together – which is usually a good sign that a move to the upside is close at hand.  Watch.

At this stage, there are better opportunities around than the Health Stocks.

XNJ (bearish):

Short-term Indicators are giving “buy” signals.  So there are trading opportunities.  Longer term investors should be cautious.

Strongest stocks are Brambles (BXB) and Aristocrat (ALL).

XSJ (bearish).

XSJ rose +0.97% this week.  Short-term Indicators are on “buy” signals, but the Index stalled at its 200-Day EMA.  Not a good sign.

CCL is the strongest stock.

XTJ (bearish but may be on the cusp of a trend change):

XTJ up +2.18% for the week and is marginally below its 200-Day EMA.  The short-term indicators are on “buy” signals.

XTJ consists of only two large-cap stocks, Telstra and TPG.  I now have a slight preference for TLS as a trading proposition.

XPJ (bearish but may be on the cusp of a trend change):

XPJ was one of the better performing sectors this week, up +1.91%.  XPJ has given short-term buy signals on indicators.  But it remains below its 200-Day EMA and stalled there on Friday.

This sector looks to be one of the better bets in our market.

Strongest stock is IOF but IOF is under the influence of a take-over offer – leave that to the professionals.  Watch others such as GMG and VCX for improvement.

RB