Charting Wisdom - stock market information and education

17/11/2023

XJO Outlook:

Looking at a weekly seasonality chart of the XJO we can see that this week just been is the weakest week of the year on average (marked with a blue diamond on the chart). One of the main reasons for this being the case is because 3 of the Big 4 banks (+ MQG) go ex-dividend this week or thereabout.

Now it’s not clear running into the end of the year exactly what will happen, but the odds are beginning to favour that more than not we may follow the seasonality of the local Aussie market as seen in the chart …. normally we will see a dip into mid-December then things become more Bullish and this leads into the Santa Claus rally.

However if this is not the case and we are weak when we are meant to be strong then that is a big tell that something else is going on and that it’s something you need to take notice of. As you are all well aware there is a lot going on in the world at present and most of it is far from good. The market will tell us what it wants to do - we just have to pay attention to what it is telling us and when.

25/10/2023

Remembering the 1987 Stock Market Crash

Last week was the 36th anniversary of the 1987 Stock Market Crash and to mark the occasion I have put together a special Charting Wisdom report looking back at what happened around the world markets at this time.

Anyone who was involved in the markets in 1987 will never forget it, and some feedback I have received from others who weren’t in the markets at this time, was how interesting they found it to read this report to get a real feel for the magnitude of what happened and what this time in the markets must have felt like.

If you would like your own (complimentary) copy of this special 1987 Stock Market Crash report please email me (Shane) at [email protected] and I will be happy to send you through a copy.

There’s lots of charts and numbers looking back at this time around the world, as well as what can we learn from this time all these years later.

(photo by Daniel Lloyd Blunk-Fernández on Unsplash)

29/09/2023

Just a quick reminder that daylight savings will take effect in NSW, VIC, TAS, SA and the ACT on Sunday the 1st October 2023. These states and territories will be putting the clock forward 1 hour, and as the ASX works off NSW time the market will be opening and closing one hour earlier for those in the other parts of Australia without daylight saving (QLD, NT and WA) from Monday October 2nd 2023.

NSW, ACT & SA also have a public holiday on Monday 2nd October for Labour Day & QLD has a public holiday for King’s Birthday.

Despite these public holidays the ASX will still be open and trading as per normal on Monday 2nd October.

19/09/2023

This week all eyes will be on the FOMC meeting and the interest rates decision being held 19-20 September over in the US. So what does the market think will be the result from the FED?

Well if we look at the daily chart of the S&P 500 stock index attached we can see they don’t know and it could go either way. The S&P 500 has been moving sideways with lower tops and higher bottoms forming a symmetrical triangle pattern. These patterns can be continuation patterns or reversal patterns as it will depend upon which direction the breakout from the pattern takes. This pattern indicates we could see a decent move one way or the other and with the FOMC meeting this week this may be the news that is the catalyst that gets it to breakout.

I have also attached another chart that could also give us a bit of a heads up as to which way the market may move over the next 2 weeks. This chart is a weekly seasonality chart of the S&P 500 index. What this chart shows is the overall move for the week of the year based on the last 73 years or since 1950.

You will see on the chart a small diamond which shows which week of the year we are now at and that this week and next are by far the weakest weeks of the year for the US market. Just think of seasonality as a road map of probable outcomes based on the past. This could indicate, regardless of what the FED announces, that we could be looking at a downside move and potentially a strong one on average.

On a side note, in the Aussie Market we also have the 36 year anniversary of the top back in 1987 coming in on the 21st of September. Anniversary dates are important and with this one being 36 years or 1/10 of 360 it may have a little more significance so it will pay to keep your eyes open in case things start to slip away quickly.

11/08/2023

This week has seen reporting season kick off locally, with the first big stock CBA reporting on Wednesday 9th August.

Below is a list of the bigger stocks reporting (correct as of 28th June) from the respective companies websites:

Stock Report date Ex Div
RIO 26/07/2023 10/08/2023
NCM 11/08/2023
CSL 15/08/2023 11/09/2023
TLS 17/08/2023 30/08/2023
EVN 17/08/2023
BHP 22/08/2023
COL 22/08/2023
WOW 23/08/2023
STO 23/08/2023
NST 24/08/2023
S32 24/08/2023
FMG 28/08/2023
MIN 29/08/2023

13/06/2023

This is a short week but a big week for the markets:

- tonight we have the US CPI coming out and this is one of the key data points the FED uses to determine interest rates

- tonight and tomorrow night we have the FOMC meeting with a decision on interest rates in the US being announced Thursday morning Aussie time

- also on Thursday we have the Aussie unemployment numbers being released

- and if that wasn't enough we have Quadruple Witching on Friday night over in the US (quadruple witching refers to the simultaneous expiration of stock index futures, stock index options, stock options and single stock futures. This all happens at the close on Friday and may lead to an increase in volatility but certainly a massive increase in volumes going through the market)

17/05/2023

An update on the XJO:

• Yesterday 17/05 the XJO opened lower and was down about 70 points at the low. Before yesterday’s trading the XJO was sitting on the bottom line of an Andrews Pitchfork (marked on the included chart in light blue) and yesterday the XJO broke below this and below the tight sideways trading range it was in. This is Bearish for the local market.

• The time in calendar days of the move up into the 17th April top was 28 days and the time from that same top to Monday 16th May was 29 calendar days - almost the exact same amount of time. While we didn’t get a change of trend around this time, the XJO did get a breakout of the trading range it was in at this time. If this breakout to the downside is a real break we should see a down trend resume from here.

• The Double Top and Head & Shoulders reversal pattern targets are potentially still in play if the market breaks down below the 6900 support level in the bigger picture (both of these patterns are marked on the included chart). As these patterns are reversal patterns we would expect the market to move further down if these patterns are confirmed.

02/05/2023

The Top 3 Reasons Why I Like Lithium:

1 - The demand for Lithium Carbonate (battery grade Lithium) is increasing at a rapid rate. Not only do we need Lithium Carbonate for laptops and mobile phones, it is also a critical element for EV’s and based on future EV numbers, they could by themselves alone, use all the world’s expected total production of Lithium Carbonate … and this doesn’t even touch on the big batteries used to support electricity grids or to store renewable electricity generated by solar or wind or the like.

2 - For the CO2 targets that have been set for 2030 to be reached, and in the time allocated, the world is going to have to transition to EV’s or other zero carbon emission vehicles like Hydrogen vehicles quickly … meaning we are going to need a lot more battery grade Lithium than the whole world is producing today.

3 - From a charting perspective I like the look of Lithium quite a lot. Since making its 597,500 high in November last year Lithium has once again been sold off down to a current low price of 165,500 here in April 2023. This is a fall of 432,000 or 72.3% in just 5 months. On the chart included you can see how the current price is right around the high made back in Oct 17 (171,000). What was resistance becomes support and vice versa. Now we haven’t confirmed a bottom yet, but I am certainly looking for one around here given this technical set up. This current fall has been a lot faster taking only 5 months to fall almost as much as it did over the 2 years and 9 months the previous time. This looks to be well overdone in the short term and I wouldn’t be surprised to see buying coming back into Lithium before too long.

** To read the entire report on why I like Lithium email me Shane at [email protected] **

15/12/2022

Read my thoughts on what I think could be good out-performers in inflationary periods in this Australian Financial Review article

Exchange-traded funds have made portfolio construction much easier given that all main asset classes are accessible for a low cost.

02/12/2022

If you’ve been following my Charting Wisdom reports you will know that we have been talking about and following a 21 Day Cycle in the local market. We also happen to have another cycle playing out in the local market and this is the 60 Day Cycle as seen in this XJO Daily chart.

This cycle has really become of note since April this year, and it starts to line up very nicely with major tops and bottoms. For example: 20th April, the high of 2022, down into 20th June, the low of 2022; the time of the move up from the June bottom was 60 days into the 19th August top; this was followed a swing back down to retest the June bottom arriving on the 3rd October, a move of 45 days or 30 trading days (half of 60). We are currently up 60 days from that 3rd October bottom here today. The question I have is will we get another 60 day cycle turn in the next couple of days?

So from a time perspective we have the 2nd December as the 60 day cycle and we also have the 6th December as the 21 day cycle - dates only 2 trading days apart. In other words we are seeing the clustering of 2 different cycles overlapping within only a few days of each ideal cycle date. Could Monday the 5th December, the middle trading day of the 2 cycles, be the new ideal date to be watching for a turn down in the market? And I say turn down as we have been moving up over the last 60 days, gaining 963.3 points or 15.02%, which just happens to be the strongest swing up all year and double the average yearly gain of 7.0 %. Now this doesn’t mean that we have to stop and turn down from here but I, for one, will be paying particular attention from where we are here and now over the next few days just in case we do put in a top.

20/09/2022

Did you know ...

These two charts show Gold in USD (on the left) and Gold in AUD – Aussie Dollars (on the right). Both of these charts cover Gold over the same time frame ... so why do they look so different?

It is standard practice that all commodities are quoted in US dollars as that is the reserve currency of the world (and has been since the end of World War 2 when it took over from the British Pound – the Sterling).

Here in Australia we do not use USD to transact with ... we use Aussie dollars instead ... so when we buy Gold for example we pay for it in AUD. This is important as the AUDUSD exchange rate is always changing (floating) and it is because of this that Gold in Aussie dollars can be, and is, very different to Gold in USD.

29/08/2022

Update on the Aussie market after yesterday’s trading (looking at the XJO Daily Chart):

Yesterday's price action has formed a Down day, confirming that Friday was the second top in a Double Top reversal pattern (marked with the two 'T' on the chart).

The new lower low from yesterday (which is below the low that is between these 2 tops) confirms this reversal pattern, setting up a target down to 6786.1.

This target level is just above the 50% retracement level of the recent rally up (6772.3).

You can also see on the chart that yesterday we were down in one day what took us 2 days to do previously.