Australia: S&P/ASX 200 (ASX:.AXJO) Is this a buying or selling opportunity?

Australia: S&P/ASX 200 (ASX:.AXJO) Is this a buying or selling opportunity?

Australia: S&P/ASX 200 (ASX:.AXJO) Is this a buying or selling opportunity?

The answer is probably both! I believe the market is primed for a sell-off after staging big gains in 2019 and a correction is healthy.

Stocks will bounce back as central banks will rush to pump their respective economies with cheap and accessible credit. As the GFC has shown us, such measures can be effective and this sell-off is not even close to being a crisis like the one in 2008.

The thing is, I don’t think selling pressure will ease quickly and we should brace ourselves for more losses in the short run. Cashed up investors will want to stagger their buying. There’s probably no need to rush.

How long will the meltdown last?

It’s almost impossible to predict this but it’s worth noting that the next US Presidential election is November 3, 2020.

Trump has already started his re-election campaign and he won’t want to see the US economy crash into a recession as voters head to the ballot box.

He can’t play the long game like President Xi Jinping who has a lifelong seat at the head of his country’s table.

Encouragingly, Trump is a wheeler and dealer. He doesn’t fight on principles but seizes opportunities. I am betting (and so is the Chinese) he will be motivated to find a way out of the conflict.

Technical Indicators

Overall, the bias in prices is: Downwards.

The projected upper bound is: 6,620.81.

The projected lower bound is: 6,336.44.

The projected closing price is: 6,478.62.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
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 27 white candles and 23 black candles for a net of 4 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 7.2466. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 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 31.97. 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 sell 21 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 -207.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 4 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -162.200 at 6,478.100. Volume was 43% above average (neutral) and Bollinger Bands were 35% wider than normal.

Open     High      Low     Close     Volume___
6,640.3006,640.3006,444.4006,478.100 877,698,624
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,754.75 6,625.02 6,151.64
Volatility: 19 14 14
Volume: 653,610,624 648,962,048 625,948,992

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 5.3% above its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .AXJO and have had this outlook for the last 1 periods.

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