Australia: S&P/ASX 200 (.AXJO) Banking sector continues to weaken as New Zealand bites ANZ

Australia: S&P/ASX 200 (.AXJO) Banking sector continues to weaken as New Zealand bites ANZ

Australia: S&P/ASX 200 (.AXJO) Banking sector continues to weaken as New Zealand bites ANZ

One was a continued weakness in the banking sector, particularly after the Reserve Bank of New Zealand (RBNZ) came down particularly hard on ANZ (ASX: ANZ) for not complying correctly with reserve capital requirements.

Under the New Zealand – and Australian – system, the big banks are able to use internal models and controls to ensure that they comply with the amount of capital reserve required.

It turns out that ANZ had not been doing this correctly so the RBNZ will now insist that it takes a standardised approach, which will increase its capital requirements by about 60% to NZ$760 million.

While ANZ New Zealand said it was “disappointed’’ that the error had occurred, the share market had an even stronger reaction, hammering ANZ shares down by 3.04% or 81c a share to $25.85.

The share market also took into account that the RBNZ might increase capital requirements for all other banks, which would be bad news for the four big Australian banks which all own New Zealand banks.

All the major banks fell, with Commonwealth Bank (ASX: CBA), National Australia Bank (ASX: NAB) and Westpac (ASX: WBC) all down by as much as 1.5%.

Analysts have warned that the higher capital requirements could have a material impact on the Australian banks.

The banking sector was also weaker due to three of the big banks going ex-dividend during the week.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,469.35.

The projected lower bound is: 6,267.88.

The projected closing price is: 6,368.62.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 84.7536. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 13 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 59.78. 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 14 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 128.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 2 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 9 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 37.500 at 6,365.300. Volume was 4% below average (neutral) and Bollinger Bands were 36% narrower than normal.

Open High Low Close Volume___
6,327.8006,398.3006,327.8006,365.300 590,227,840

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 6,296.95 6,246.98 6,033.60
Volatility: 11 10 14
Volume: 567,766,720 605,115,968 612,998,208

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 5.5% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on .AXJO and have had this outlook for the last 21 periods.

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