See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
I have said many times here "price is the ultimate indicator". All other indicators (which are mostly gleaned from price and volume) are a guide, price is the boss and its best to do what the boss tells you. Looking at the chart above the volume indicators are lagging the price - a little. However considering last nights huge rally in the Russell I would think Mondays XAO performance will mirror that. Of course I have learnt not to "expect" but the correlation between the Russell and the XAO is significant. Last week I said this:
the Russell is still showing a strong break out despite this weeks pullback. I would think some buy opportunities will exist if the price falls more and THEN goes back up after bouncing off support. The Russell could still fall more - perhaps down to the 2200 area. At that price the OBV and MFI will be sitting on support lines and unless the market gets really bearish, the probability is it would be a good buy zone.
Of course it may not fall that far, it could just power on............
You can scroll down to last weeks chart of the Russell but if you go to many of the free chart providers (stock charts, big charts, trading view) you can see the last 4 days of the Russell was nothing but up.
A few other big things happened through the week. Gold bounced but the shares still languish its performance. I do think its only a matter of time before good quality gold juniors play catch up, but until then we cant force or expect it. There is a saying in Zen "nothing is forced or controlled" and that is certainly the case with gold shares at the moment. In fact its a great saying to keep in mind with all your trading. Be in flow - don't fight whats happening even though you "think" it "should" be different.
Bitcoin and some of the altcoins had a strong week. I do wonder if the interest in crypto is pulling capital away from the gold sector. In the past the place to speculate was gold shares but now its altcoins? Could be.
The bull market in 52 week closing highs - is back in town. There are eight signals this week in the Australian top 500.
Have a good trading and investing week,
all the best
Peter
ALERTS FOR THIS WEEK POSTED BELOW
52 week closing highs as of the Fridays close 22/11/2024
Below are the alerts from a scan of the ASX 300 and the 300 to 500
300: ALQ ASX MYS NXG ORG SQ2
300 - AVJ CBO
The exit used FOR THIS METHOD is the 5/12 EMA crossover. Therefore, some stocks will be re signalling a new high buy signal if they have been recently exited by using the 5/12 exit within the last 12 months. This is important and you need to understand this.
Of course the 5 EMA needs to be above the 12 EMA to make the 52 week high valid, (otherwise we would be selling straight away) nearly always this is the case, but rarely if a stock spikes it is not.
So to repeat, the rules are: USING WEEKLY PARAMETERS!
Entry:
Share price to make a 52 closing (or equal to) week high (when selecting a buy, favour the cheapest stock)
The 5 ema to be above the 12ema
Exit:
if the 5 ema crosses below the 12 ema
The above system contains no position sizing, bull or bear filters or fundamental stock selection, these are discussed and taught to private clients or at my courses.
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
Last week I mentioned low volume but this week made up for it. The two volume indicators on the chart above look "toppy" but the price had a strong week. The bulls won the week over the bears - note how the price closed up at the end of the week after being down earlier. That sort of price action is positive, it indicates people are still buying despite the Trump election euphoria backing off in the US. You can see this clearly in the chart below.
I have mentioned many times the correlation between the Russell and the XAO and it is why I often discuss this Index. For the broad based rally in the US to continue this index really needs to perform - not just the Nasdaq or SP500.
After the initial euphoric rally, price reversed this week on the Russell. You can see how the reliable 13 period MFI was flashing a bearish divergence and price responded accordingly. However, the Russell is still showing a strong break out despite this weeks pullback. I would think some buy opportunities will exist if the price falls more and THEN goes back up after bouncing off support. The Russell could still fall more - perhaps down to the 2200 area. At that price the OBV and MFI will be sitting on support lines and unless the market gets really bearish, the probability is it would be a good buy zone.
Of course it may not fall that far, it could just power on and I will be keeping an eye on the daily chart to see if that happens.
Below is the gold chart.
Gold looks oversold and the gold stocks are suffering because of it. Price is sitting on the first horizontal support line but it could fall more to the second support line around 2500. The short term 10 period MFI is oversold. In the past each time that indicator has got so low the price has bounced, but a bounce is not necessarily a rally or a new trend, so we will have to wait and see how this one plays out. IMO there are still positives for gold and gold shares but it depends - the US$ is having a rally and it needs to back off, money is pouring into tech and crypto, doubts have now emerged about the speed and amount of rate cuts (low rates favour gold).
So, a lot happening at the moment. You are either finding it all interesting and perhaps exciting or the amount of unknowns are stressing you out.
Remember to have a plan, know your risk tolerance, take your stops, don't ride the losers, try not to have stops too tight - its a good way to die from a thousand cuts.
Have a great week - it will be an interesting one!
Peter
ALERTS FOR THIS WEEK POSTED BELOW
52 week closing highs as of the Fridays close 15/11/2024
Below are the alerts from a scan of the ASX 300 and the 300 to 500
300: GMG HSN QBE VUL
300 - 500: LGI
The signals provided are WITHOUT A BULL FILTER.
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
This is a similar chart to the one from last week - except the price has bounced off support levels. I do notice something, not a lot of volume from last week. I suppose the Aus market did have 3 days of uncertainty before the election result was certain. Looking at a daily chart (not shown) volume on Thursday and Friday was a lot more than Monday to Wednesday.
It remains to be seen if the market follows through with more buying next week. Regardless of that this is a very strong market and as Ed Seykota once quipped "the trend is your friend until it bends at the end".
ALERTS FOR THIS WEEK POSTED BELOW
52 week closing highs as of the Fridays close 8/11/2024
Below are the alerts from a scan of the ASX 300 and the 300 to 500
300: BEN CPU NWS
300 - 500: KPG
Comments and charts from 1/8/24
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
Last week I said this: " markets do not go up in a straight line and at some point in time this market will correct. At the moment you can see the MFI is now in overbought territory and the OBV is sitting on its trend line. When markets get toppy they get nervous and it won't take a lot for this market to correct - just some worrying news. Next weeks US election (Nov 5th) may well be the catalyst. First support sits around 8300 and then 8200 and then of course the round number of 8000"
Well we didn't really get any worrying news (maybe a little about company earnings faltering) but the concerns about the U.S. election is the big thing on peoples minds. A dip down next week to that support area around 8200 would not surprise me. I am going to digress a little and have some fun......
Sometimes it helps to put our "imagination hat" on. For example here are some scenarios about next week in circus land - remember, Americans love a show.
1/ Trump wins with a solid margin
2/ Harris wins with a solid margin
3/ The election is very close and uncertainty prevails for 2 weeks
4/ Trump loses and kicks up a fuss and markets fall (or rise because it was expected)
5/ Trump wins but markets fall on worry he is a loose cannon
6/ Trump wins and markets rise on thoughts he is good for the economy
7/ Harris wins and markets rise on a "same as before, steady as she goes" mentality
8/ Harris wins and markets fall on worries the democrats cant manage the economy and Trump will continue to cause problems
9/ Whatever happens markets rise from a relief rally that we know who is president and the election is over
points 10, 11, 12 and so on...........
So, how does anyone know what will happen? In my opinion it's a waste of time trying to predict, and where am I going with this little rave? Regular readers have guessed. Have a plan, your risk tolerance and methodology worked out so you know what to do in any scenario. I know people that are 100% in cash, 65%, 50% etc. I know people that are "all in" 100% invested. These are the times its so important to know your plan and stick to it. Don't have a plan?
I suggest you first read my eBook Mindful Trading and then follow up with The Zen Trader. Link to those books is below
https://www.easysharetradingsystems.com.au/products-and-services/e-books
So, let us see how the circus all unfolds next week and I look forward to writing about it next week!
Regards
Peter
COMMENTS AND ALERTS as of the Fridays close 25/10/2024
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
I have been saying for quite a few weeks now that we have a strong bull market. However, markets do not go up in a straight line and at some point in time this market will correct. At the moment you can see the MFI is now in overbought territory and the OBV is sitting on its trend line. When markets get toppy they get nervous and it won't take a lot for this market to correct - just some worrying news. Next weeks US election (Nov 5th) may well be the catalyst. First support sits around 8300 and then 8200 and then of course the round number of 8000.
As you can see this week was down but on low volume. One bar does not make a trend and next week we will certainly have more information from the price and volume. That will give an indication of how strong this market really is.
The Russell in the US paints a similar story. It's pulled back and it remains to be seen if this is just a consolidation period or something more sinister. Volume indicators are holding OK, but the index needs some good news to rise . Again the same story applies, the next two weeks in the US is pivotal to the fortunes of this index.
Until next week
Peter
COMMENTS AND ALERTS as of the Fridays close 18/10/2024
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
It's a bull market. Price is up, both volume indicators are up and are showing no divergence. I will be Zen about this index and say nothing more - as there is not anything more to say :)
However, I will discuss the Russell, as I have often mentioned the correlation it has with the XAO and the importance of this index to show if the rally in stocks is broad based or not.
For simplicity I have chosen to show a line chart. Line charts are calculated from the closes, being a weekly chart it shows the closing price of each week. This analysis is considered by some as more telling, rather than confusing the mind with Bar, Candle or Heiken Ashi charts (to name just a few of the more popular). So, back to the chart - although volume appears to have a little work to do, price has broken a 2.5 year down trend. Obviously there is strong resistance at 2400. "If" this index gets the volume (buying) that it needs to continue its uptrend, the measured move once it takes out the high of 2400 - is..... wait for it ..... 3200.
Will this happen? How do I know! :)
What I do know is, rates are falling, so is inflation, the $US is falling which can be good for US stocks, oil is cheap which is good for many businesses, the US election is an unknown - but it would not surprise me to see markets settle and then rally once it's over. Employment is steady too. So, on the other side of the bears are the bulls, maybe even the "Goldilocks economy bulls". A saying once quipped by Alan Greenspan (ex Fed chairman) before the 2007/8 crash and GFC.
Of course we have risks, the Middle East, Taiwan, US debt, unemployment could rise. The list is long and the market climbs a wall of worry. How do we manage all this diversity of thinking and feelings?
Trade within your means, manage risk, have a plan - particularly an exit plan. Stay healthy, exercise, eat well, hang out in nature to remind ourselves there is something bigger than just us and the markets "out there".
PS: if you scroll down and look at last weeks chart comparing the XGD with the Gold price and my comments about them tracking each other - the XGD is now (this week) outperforming the Gold price. With last nights rally in precious metals in the US, this trend will continue until buyers are exhausted. I will discuss the gold and gold stocks next week, as I want to wait and see how gold and the gold stock sector performs this coming week. I expect gold stock juniors to go bannanas but I have also learnt to expect nothing.
Until next week
Peter
COMMENTS AND ALERTS as of the Fridays close 11/10/2024
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
The XAO is still trending up. A little less volume the last few weeks which is understandable. The market climbs a wall of worry and the current worry is the US election in early November. Many economists are concerned about a Trump win, why? Too much unknown. Markets prefer certainty and therefore prefer a Harris win. That would mean "steady as she goes" ( no pun intended) and not so much change. I think markets may rally after a Harris win but I am not one to predict, just a gut feel. I want to discuss the Russell 2000 again this week, as it is the most correlated US index with the XAO.
As you can see its looking quite strong. Despite the doom and gloom from some analysts, this index which reflects more the health of Main street not just Wall street, appears quite healthy. It is showing that the rally in stocks is becoming more broad based and that it is no longer just the magnificent 7 driving the market. One more chart - comparing gold with the Australian gold share index.
A frequent comment I hear is that gold stocks are not keeping pace with the gold price - or that the stocks are not outperforming the gold price as they "should". Well, there are no "shoulds" in trading, just what's happening. As you can see stocks ARE tracking the gold price and very closely since March. In the past (which is not the present) there have been times when gold stocks HAVE outperformed the gold price. Will they start to outperform again?
How do I know ! :)
What I do know is that it could happen, and if it does happen, the place to be is in the mid and small cap gold miners that are yet to perform.
That's it for me this week. Apologies for missing last weeks post.
All the best,
Peter
Alerts for this week are below,
ALERTS FOR THIS WEEK POSTED BELOW
52 week closing highs as of the Fridays close 11/10/2024
Below are the alerts from a scan of the ASX 300 and the 300 to 500
300: MAF TPW
300 - 500: BLX BVS RPL
The signals provided are WITHOUT A BULL FILTER.
See charts below with an On Balance Volume indicator and the Money Flow Indicator using a 13 period
I am writing this Monday 30th September - a bit late this week as I was away for the weekend facilitating a Zen workshop. Unfortunately with some of the recent bugs on the site I have managed to accidentally delete some previous weeks comments, so I will repeat some comments here.
What appears outstanding with this recent rally is the OBV - it's strong, very strong. Its outpacing the price, what normally happens here is one of two things.
1/ the price plays catch up.
2/ the price slows or even falls a bit to revert back to the "normal" correlation between price and volume.
Looking at the 13 period MFI you can see it's made a 52 week high, its much higher than it was in Sept 2023 and is now approaching the over bought (OB) area which was way back in July 2020. However! Interestingly you can see the price continued on from that high in July 2020 to rally another 2000 points or around 35%, from 6000 to 8000. That is a great example of how indicators - be they technical or fundamental, do not predict the price. Indicators provide some essence of probability but -
price is the ultimate indicator.
Here is another chart to discuss, that I think has very big ramifications for the Australian stock market in the near future (weeks to months perhaps years).
For quite a few years now the discussion amongst many analysts has been that the market, both here and in the US, has not been broad based. It's been dominated by the Gorilla stocks such as the Magnificent 7 in the US and the big stocks here in Australia. Eg: CBA, WES, WOW, RIO etc., which are all in the top 20. The narrative was, that what the market (and the economy) needs is to see the mid cap and smaller companies start to perform. What was holding back these companies? You probably guessed - interest rate cuts.
So, the chart above is clearly breaking to the upside. The XSO represents the stocks in the ASX 300 that sit between 100 to 300, It cuts out the top 20 of course as well as the remaining top 80, excluding completely the top 100, focusing on the mid caps and smaller companies.
The price has broken a 2.5 year down trend, the last 2 weeks of volume have been very bullish and the volume indicators are responding. Every alert this week from the ASX 300 (ten of them) is from the 100 to 300, that should tell you something, it's obvious, that is where the strength in the market is.
Now, even though the MFI is approaching the OB area, as we have seen before, price can continue. IMO there is now something of great importance to watch closely, the OBV. If, (trading has lost of if's) the OBV makes an all time high - which is not far away, this will be another huge bullish sign for this sector, the stock market, the economy, politics, macro economics, the works. Of course there is much discussion about how long this rally will last, all based around the many indicators be they technical or fundamental, but markets are strange beasts and they will do what they want. Once human emotion takes over and FOMO kicks in prices can go to very high levels. Those of us that traded during the dot.com years of 1995 - 2000 know this well. So, one more chart and you are going to think I am crazy.
The chart below is the SPX from the US. It's a quarterly scale to take out the noise. In 1996 when this index made a new all time high, it doubled in 2 years from 500 to 1000, it tripled in 4 years (1996 to 2000) from 500 to 1500.
A doubling from the recent all time high of 4,800 will take the market to 9,600, a tripling in 4 years will take it to almost 15,000. Can't happen?
It has before! And, the chart below (for effect) is NOT in log scale, do yourself a favour and look at it in that format allowing for % gain, it looks more probable.
Food for thought,
have a great week,
Peter.
Alerts for this week are below,
ALERTS FOR THIS WEEK POSTED BELOW
52 week closing highs as of the Fridays close 27/9/2024
Below are the alerts from a scan of the ASX 300 and the 300 to 500
300: A4N DEG IDX INR LYC PXA RUL SDR SFR TUA
300 - 500: FWD
Please note: in the eBook I wrote in 2016 (available for purchase on this website on the link below) I have made some changes to the system. If you have bought the eBook I am happy to email you a PDF explaining the changes I made, which from testing and trading does improve the system.
Here is the link to the eBook Mindful Trading using Winning Probability written in 2016 -
and the internationally published The Zen Trader (2022) - now in three languages, English, Spanish, German and in 2025 Traditional Chinese.
IMPORTANT POINTS TO CONSIDER
A new 52 week high for this system is classified when the stock price is at its highest close (or equal to the highest close) counting back 52 weeks.
If a stock continues to make new highs, for example in the 53rd and 54th week, they are now regarded as ROLLING highs, not NEW 52 week highs.To clarify again, the buy signal for THIS system discussed is a NEW 52nd week or 1 year closing high, not a rolling high as is often given elsewhere.