Australia: S&P/ASX 200 (.AXJO) another Trump soap opera

Australia: S&P/ASX 200 (.AXJO) another Trump soap opera

Australia: S&P/ASX 200 (.AXJO) another Trump soap opera

Now it is a spiraling drama over the autonomy of the US Federal Reserve that frazzled investors must cope with as stocks lurch toward a bear market.

Word that President Donald Trump has discussed firing Federal Reserve chairman Jerome Powellhas gone down poorly on Wall Street, a place not known for its sympathy with Powell’s policies. Most investors saw the prospect as ill-advised meddling that could sow more agitation in a stock market that just had its worst week in almost a decade.

“There’s an old joke: the beatings will continue until morale improves,” said Keith DeGreen, chief executive officer at DeGreen Capital Management. Ousting a Fed chief because his policies are scaring investors “will likely spur more selling, ironically”, he said.

While views were nearly unanimous that firing Powell would have grave implications in the long term, of more immediate interest was the impact of another Trump soap opera on already hair-trigger markets that reopen on Monday in New York.

Volatility in US equities surged to a 10-month high on Friday and US exchanges just reported the heaviest two-day volume since 2011.

Australian shares closed last week at a two-year low with the S&P/ASX 100 Index down 2.4 per cent to 5467.6. 

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 5,838.45.

The projected upper bound is: 5,626.44.

The projected lower bound is: 5,291.64.

The projected closing price is: 5,459.04.

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 24 white candles and 26 black candles for a net of 2 black 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 12.6308. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 7 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 34.14. 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 38 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 -190.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 -38.200 at 5,467.600. Volume was 114% above average (neutral) and Bollinger Bands were 5% wider than normal.

Open High Low Close Volume___
5,505.8005,543.1005,426.6005,467.6001,377,983,360

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 5,584.73 5,744.17 6,016.43
Volatility: 21 19 13
Volume: 794,591,808 664,679,104 596,111,680

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 9.1% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 11 periods.

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