Australia: S&P/ASX 200 (.AXJO) shares fall as recession worries deepen, oil stocks weigh

Australia: S&P/ASX 200 (.AXJO) shares fall as recession worries deepen, oil stocks weigh

Australia’s main stock index fell on Wednesday as prospects of a deep global recession and its impact on the demand for crude oil hammered energy stocks and offset better-than-expected trade data from China, the country’s biggest trading partner.

The benchmark S&P/ASX 200 index fell 0.3% by 0039 GMT, with a 3.4% drop in energy stocks weighing the most. If current levels hold, the energy sub-index is on course for its worst day in nearly two weeks.

Oil prices slid sharply amid persisting worries that even the record output-cut deal signed by major producers this week would not be enough to cushion a coronavirus-induced hit to demand.

“The deal in its current format sorely disappointed relative to market expectations even if executed to the letter,” said Stephen Innes, chief global markets strategist at AxiCorp.

“Markets believe the deal won’t come close to offsetting demand devastation and isn’t even large enough to eat into what’s in storage.”

A slump in crude prices took the shine off data that showed exports out of China fell less than feared and an overnight rally on Wall Street where optimism grew ahead of imminent announcements from President Donald Trump about re-opening the U.S. economy.

Market participants remained on tenterhooks as the International Monetary Fund forecast that the global economy would this year endure its steepest downturn since the Great Depression of the 1930s.

A handful of single-stock moves saw Lynas advance 3% as third-quarter output of rare earths jumped from the prior quarter and as the miner said it applied for an exemption from coronavirus-linked curbs in Malaysia to resume operations.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 5,983.42.

The projected lower bound is: 4,873.35.

The projected closing price is: 5,428.39.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 90.7935. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 14 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 50.67. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 13 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 155.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 12 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -30.400 at 5,457.700. Volume was 51% below average (consolidating) and Bollinger Bands were 15% wider than normal.

Open     High      Low     Close     Volume___
5,488.1005,533.0005,416.4005,457.700 424,180,448
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 5,263.63 5,993.18 6,538.34
Volatility: 45 66 36
Volume: 1,036,153,152 1,138,310,016 738,059,136

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

S&P/ASX 200 is currently 16.5% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 1 periods.

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