XSO 1.04% 2,641.3 s&p/asx small ordinaries

The Brains Trust - 2020

  1. 15,448 Posts.
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    Because of the changes in my personal life, I am finding that I can only write my notes each week rather than daily.

    I have mentioned previously that it pays to keep an eye on things over the holiday period as markets have a nasty habit of springing a few surprises when everyone isn’t watching, and this year has been no exception.

    The trilogy I set for 2020 “gold breaking its downtrend, US dollar threatening to break downside from a top pattern while the printing presses are being revved up” is working but just a bit quicker than even I had anticipated. It took gold five months to correct after the peak in August last year but has retraced it all in a matter of days and is already back up to that high.  A point I have maintained a number of times over the years - I don’t like to stand in front of moving trains and goodness hasn’t this been some train but surely it must start to meet resistance up here.

    The S&P scored another new high during the week but turned down sharply again on Friday.  Might be starting to build a little top here but will need to watch it.  The CNN Fear and Greed Index got to 97 in Thursday’s trading.  I can’t remember seeing it any higher than that and last Christmas when we had a sell-off it got to 2.  So a lovely balance there….

    Interesting that China is joining my trilogy party by cutting reserve requirements. Certainly helped their market find its feet.

    US dollar has broken down from the rather ominous looking head and shoulders top – has rallied back up into the overhead resistance but looks to be turning down again.

    And with all the latest increase in world tensions, who can go past the price of crude.  It is now pushing the highs of the past year.  Wouldn’t need to go much higher and this market would be telling us that we have a serious problem on our hands.

    And on a slightly different track, I have mentioned before a US ETF called BATT – or battery stocks.  Short term it is looking a bit overbought but I think it has formed a huge bottom pattern so we are going to need to watch that this year.  On this theme, I mentioned some time ago that I was setting up my own little index of lithium stocks.   I know there are still many forlorn lovers of this section stuck in the stocks and I have said many times we would not see a bottom in this sector until they all gave up but my little indicator started to turn up at the end of last week.  I need to see a correction in the BATT ETF but interesting….

    XJO had a somewhat erratic week but didn’t finish with much change.  I keep watching the XMD index (Midcaps) as it looks as though it really wants to move but is continually held back by weakness in other sectors.  If it can break topside, I think it would be a good sign for many stocks.

    At the moment, each week seems to start with so many markets somewhat “delicately poised” and this one is no different.  We need to pay close attention to many charts over coming days.
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