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ASX 200 @ 2 NOV 20212 November 2021 – Market Watch The last time I did an analysis on the S&P/ASX 200 was on 26 October (red arrow). I said that it was good that Blue Arrow No. 4 didn’t look likely to take place and that’s a good sign for the short-term. How wrong I was as the ASX 200 quickly retraced to fall below the (i) 7400 psychological support, (ii) short-term support, and (iii) mid-term support. In last Sunday’s FB livestream, I was lamenting that the US indices continue to create new all-time highs but the ASX 200 tries to find every opportunity to disappoint. A head-and-shoulder chart pattern is forming and a break at the neckline (7250 levels) could spell trouble for the short- to mid-term. With last week’s inflation numbers coming in higher than expected, investors are pricing in an early interest rate hike. Today, the Reserve Bank of Australia’s (RBA) Governor did nothing to calm investors’ nerves by not reiterating that official interest rates will not be increased until 2024. Interest hikes are a tool to counter the rise on inflation. Inflation is usually a sign of the broader market recovering more people re-joining the workforce, increase in wages, increase in spending, etc. At the same time, interest hikes also mean that the cost of borrowings will increase and thus, temper any potential spending sprees like properties, quick business expansions, etc. As seen in the US in late September, any talk of bond tapering can spook the markets as that is a precursor to interest rate hikes. With no confirmation that the RBA will wait till 2024 to increase rates, there is a potential that the ASX 200 will see more downwards pressure in the coming days. The US markets recovered from their September scare to create new all-time highs. How about the ASX 200? Will it recover above 7600? Or are we looking at a re-test of the 7150-7250 support zone again? I’m personally avoiding the big caps while being more selective with my purchases. How about you? Is this another opportunity to average down? Or are you waiting for more signs of recovery? If you find this market analysis helpful, let me know in the comments. May the markets continue to be with us!
ASX:XJO
by Jerm88
ASX 200 @ 26 OCT 2021Text me if you have any questions/comments for me. ----- The last time I did an analysis on the S&P/ASX 200 was on 12 October (red arrow). Since then, the ASX 200 has broken through four resistances: - (i) counter-trendline (purple dotted line), (ii) short-term average, (iii) mid-term average, and (iv) the 7400 psychological resistance (orange line). Within 2 weeks, the ASX 200 has recovered almost 2.3%. During the same time, the S&P 500 has rebounded by almost 5%. In last Sunday’s FB livestream, I compared the ASX 200 and the S&P 500. I’m sure quite a lot of us have wondered why the ASX 200 retraces faster but rebounds slower than its US counterpart. This is a clear sign that the ASX 200 index is weaker. I covered more ground during the livestream, so I suggest checking that out. However, I do want to address the issue of bond buying (ie. printing money) being “financial doping”, “unsustainable”, “bubble creation”, and “impending major crash.” Economics 101 has taught us that printing of money is bad as it would greatly depreciate the country’s currency. Comparing the USD/AUD on 1 Feb 2020 till today, the USD has depreciated by around 10% during these months of heavy printing of money. At the same time, the US stock markets’ post-Covid crash recovery have almost doubled Australia’s recovery. Combining these two things (ie. currency depreciation and market recovery) would see a net gain for the US markets. I infer that the wider benefits to the economy (ie. global financial market stabilisation, job creation, etc) outweighs the currency depreciation factor. Personally, I would take my hats off and say that the bond buying exercise has achieved its intended objectives. At the same time, I’m also pretty sure there will still be a shock to the market once the financial teat is pulled out of investors’ mouth. When that happens, it’s likely that the ASX will retrace faster and recover slower than the S&P 500 again. Besides that, during the livestream, I also shared about the 4 potential directions that the ASX 200 could take over the next few weeks and what each direction would mean to the market. After 2 days of trading, it’s starting to look like Direction No. 4 (ie. Blue arrow = immediate retracement) is unlikely to take place and that’s obviously good news in the short-term. An immediate retracement would have spelt trouble as it would have heightened the importance and strengthened the resistance of the 7400 psychological zone. The US Federal Reserve’s FOMC meeting is taking place next week and we will have more clarity as to when the Feds will start tapering their bond buying exercise. With the Dow and the S&P 500 continuing their strong recovery and creating new all-time highs every day, I am expecting a strong pullback to happen soon. It’s important to make a distinction between feelings and facts. I have been expecting a pullback since mid-October but if I had gotten out of the market early by “predicting” certain directions, I would not have made continued gains. As a Trend Follower, if the stocks or index is still in an uptrend, I will continue to stay in the game until the uptrend breaks. Being trigger happy and selling too soon will cause a lot of heartache in trading.
ASX:XJO
by Jerm88
3
ASX 200 @ 12 OCT 2021Text me if you have any questions/comments for me. ----- 12 Oct 2021 – Market Watch The last time I did an analysis on the S&P/ASX 200 was on 5 October (red arrow). Since then, the ASX 200 has recovered less than 0.5%. It is currently testing the counter-trendline (purple dotted line). A failure to breakout would likely see another retracement to the 7200 psychological support. Further overhead resistance looks to be around the 7360-7400 levels. Last week, I mentioned that I would be more willing to trim positions rather than add new ones especially if there is no good recovery in the markets. At that time, I was exploring 1 or 2 buying opportunities but instead, I entered 3 stocks that have given me gains of up to 4%. Besides the purchases in Australia, I was also adding 3 new stocks into my US portfolio and 1 new stock into my Malaysia portfolio. Why did I suddenly become bullish when I am naturally quite conservative? As explained during last Sunday’s FB livestream, I was quite happy with the news that the US debt ceiling crises has been averted for now. The US government has kicked the can down the road to early December 2021. This should calm the markets for the next few weeks before the political rhetoric heightens again towards the end of November. The US employment figures that came out last Friday disappointed the market and points to a slowing down of job creation. The combined number of jobs created in August and September were less than 50% of the target of 1 million jobs. I have a strange feeling this would temper the FOMC’s hawkish stance and they might even elect to postpone making an announcement on tapering bonds next month. If my gut feeling is correct, this would place a lot of pressure on the tapering announcement to be made in December’s FOMC meeting. Couple this with the debt ceiling crises that will no doubt loom large again, I expect that these twin risk events will create a lot of uncertainties in the markets. When the US sneezes, the whole world gets lung cancer. I don’t think we will be spared here in Australia if there is a retracement in the US. As I mentioned previously, I still expect that a strong retracement will place in Australia over the next 2-3 months. With all that doom and gloom, why did I enter new positions? Personally, I used the previous retracement (in late Sep and early Oct) to find stocks that were outperforming the market. Usually, when the market recovers, these stocks will tend to outperform the market and recover at a faster pace. Besides that, with most of the uncertainties coming in early December, I expect the markets to experience a mini bull run at least over the next few weeks. With that said, I am still trigger happy and I will cut my positions in a heartbeat if the markets turn against me. How about you? Have you entered new positions? Or are you looking to sell some old positions for a quick profit (or lower loss)?
ASX:XJO
by Jerm88
6
ASX 200 @ 5 October 2021 5 Oct 2021 – Market Watch The last time I did an analysis on the ASX 200 was on 27 September (red arrow). I mentioned as long as the index doesn’t experience a successful push to 7500 levels, I would likely trim positions instead of collecting new ones. With uncertainties stemming from the twin events of the US debt ceiling and Evergrande, the ASX 200 has tested the lower boundary (7150 levels) of the support zone (highlighted in blue). Even though the index closed with a pin bar and on the upper boundary (7250 levels), I still think it’s too soon to say that this is the end of the bleed. As I mentioned on Sunday’s FB livestream, I am expecting the next 2-3 months to be a difficult period to trade. US President Biden has voiced out his pessimism of being able to raise the debt ceiling. If that is unsuccessful, will the printing of money end? Whether you like it or not, the global equity markets have benefitted from this additional liquidity and the thoughts/fears of even turning off the tap can send markets crashing. Evergrande finding a majority buyer for one of its subsidiaries has injected some confidence into the markets; at least for the near term. I still think more needs to be done to restructure the huge debt but I’m cautiously optimistic that the Chinese government will step in. As it is, there is already a directive to government-linked companies to do all they can to help out Evergrande. Reading between the lines, this usually means buying the distressed assets of Evergrande. To get more of my commentary on Evergrande, you can watch the livestream recording (text me for the link) starting from the 16-min mark. I have exited almost all of my positions last week and I am only left with one stock. Will I buy more? I am evaluating 1 or 2 possible buying opportunities, but I am not anywhere close to pulling the trigger yet. I don’t subscribe to the diamond hands philosophy, especially when it comes to my trading portfolio. Thus, I prefer to be very selective in this uncertain period. How about you? Are you collecting more stocks now? Or are you keeping your powder dry and buying in when the retracement has ended, and signs of market rebound has appeared? If you find this market analysis helpful, let me know in the comments. May the markets continue to be with us! Disclaimer:- I’m a mid-term trader and I hold my stocks between 1-3 months. I’m using Trend Following strategies and my analysis will be from a perspective as a Trend Follower. I’m sharing these analyses for learning purposes and as always, DYOR.
ASX:XJO
by Jerm88
2
ASX 200 @ 27 SEP 2021Text me if you have any questions/comments for me. ----- 27 SEP 2021 – Market Watch As mentioned in last night’s livestream, the ASX 200 is currently trading in No Man’s Land. This is a zone where it is trading in a band that is bounded by a strong resistance (7400 levels) and strong support (7250 levels). Usually, when an index or stock is stuck in No Man’s Land, there needs to be a strong catalyst to break either the resistance/support. With the markets still feeling the unease stemming from Evergrande’s missed interest payment last Thursday and the continued lack of clarity on the US Fed’s tapering plans, I fear we might continue to be stuck in this tight band (blue shaded zone) for at least the coming week. The best-case scenario is if there is a successful push to 7500 levels and beyond. If it happens, I would be more bullish on the market. As it is, I am more trigger happy when deciding to trim positions. If Evergrande somehow presents a huge contagion effect at a global level similar to Lehman Brothers, the ASX 200 will likely drop to possibly even break 7150 levels. 88% of my stocks are green today. How about you? If you find this market analysis helpful, let me know in the comments. May the markets continue to be with us! Disclaimer:- I’m a mid-term trader and I hold my stocks between 1-3 months. I’m using Trend Following strategies and my analysis will be from a perspective as a Trend Follower. I’m sharing these analyses for learning purposes and as always, DYOR.
ASX:XJO
by Jerm88
10
Where to for the XJO - is it time to go short?I note that there is a lot of noise in the financial media currently around potential collapses in the Chinese property market and various other factors, but let's screen that out and have a look at what the XJO chart is showing. From the chart, it looks reasonably apparent that a downtrend has started forming, starting from the most recent high of 13 August. The chart shows that following the open on 14 August, the market failed to make a new high and started trending downwards for the following week. Fairly solid resistance was then found at around 7460 on 19 August with several retests until around 9 September (between these dates the market seemed to be trading in a fairly tight 60 point range). On 9 September the support level was broken and for the following week or so (until 17 September), the previous support level providing resistance, with another support offered around 7360 (the close on 9 September). Today's movements seem to pretty clearly break through that resistance, but we'll need to see what tomorrow brings to see if there is confirmation of the breakdown. Other things that I note on the chart are the 20 and 50 day MAs. To me, it looks like the 20 day MA will likely cross the 50 day in the next day or so (a bearish indicator in my view). All in all, for me it's not wholesale shorting time until the 200 day MA is broken at around 7000, but there may be opportunities in the short term if you're looking for them. So in summary what visible to me on the chart * A clear downtrend indicated by both MA slopes and a pattern of Lower Highs and Lows * Two clear breakdowns from ranges, with support flipping to resistance. * MA crosses likely. Anyway if you've liked this post check out my blog - www.nickthetraderguy.com
ASX:XJOShort
by NicktheTraderGuy
2
Trend breakI'm not a technicals person. Pulled the chart up and threw a regressession trend over the ASX200 since the bottom of COVID selloff. The trend was broken nearly this exact time last year, and was followed by dip buying. Happened again (though not on RSI oversold) in late October. I believe there is a running theory around option expiry causing dips, but also general bearishness around this time of year which has historically been tough for equities. Add to that an iron ore price collapse and China debt fears and one wonders whether the dip buyers will return to save the XJO. No position, dont invest based on macro or technicals.
ASX:XJO
by adenjb