Australia: S&P/ASX 200 (.AXJO) downward pressure remained for all sectors

Australia: S&P/ASX 200 (.AXJO) downward pressure remained for all sectors

Australia: S&P/ASX 200 (.AXJO) downward pressure remained for all sectors

Investor nerves are still rattled after the worst weekly loss on the Australian sharemarket since January 2016 last week with the ASX 200 stumbling again on Monday. The index is down another 88 points or 1.5% to 5807 and accelerating towards lunch despite a strong rally for Wall Street on Friday where the Dow rebounded 1.2% and the NASDAQ lifted by 2.3%.

The downward pressure has remained for all sectors with financials and materials bearing the brunt of the losses. The big four banks are down in the range of 1.5-2% along with Macquarie Group (MQG) and insurers. Metals prices were generally higher but that has not related back to mining stocks with declines for a large proportion of miners.

Among the limited winners is health stock ResMed (RMD), up 0.5% while telco TPG Telecom (TPM) is advancing 0.3%. Santos (STO) is 1.3% higher after signing a gas processing agreement with Real Energy (RLE) at STO’s facility in Moomba, South Australia.

Retailers are mostly lower although Wesfarmers (WES) is 0.5% weaker after releasing quarterly sales for Coles ahead of its planned spinoff later this year. Headline sales increased 5.8% and total sales improved 5%, benefited by the success of the ‘Little Shop’ promotional campaign. Coles liquor and convenience also recorded sales growth over the quarter.

Evolution Mining (EVN) is 2.5% weaker on a weaker quarterly gold production update. Output was down on the prior quarter to 200,218oz while costs increased over the same period with an All-in Sustaining Cost of A$885/oz.

Elsewhere, jewellery retailer Michael Hill (MHJ) is slumping 25% after releasing a quarterly update after market on Friday. Group revenue was down 8.8% while same store sales declined 11% on the prior year. Sales in all regions (NZ, Aus & Canada) fell for the quarter.

It is a quiet day on the economic front locally with no major releases. The major talking point will be the September employment data released on Thursday this week. The Aussie dollar is holding around the 71 US cent mark.

So far, 0.9B units have traded worth $1.9B with 397 stocks higher, 554 weaker and 335 unchanged.

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 6,114.10.

The projected upper bound is: 5,945.71.

The projected lower bound is: 5,711.06.

The projected closing price is: 5,828.38.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

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 9.4653. 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 22.50. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 80 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 -167.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 5 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -58.600 at 5,837.100. Volume was 2% above average (neutral) and Bollinger Bands were 134% wider than normal.

Open High Low Close Volume___
5,895.7005,895.7005,796.0005,837.100 593,336,576

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

Moving Averages: 10-period 50-period 200-period
Close: 6,044.19 6,200.59 6,078.21
Volatility: 19 12 12
Volume: 605,968,576 607,615,488 568,265,216

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 4.0% below 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 moderate flows of volume out of .AXJO (mildly bearish). Our trend forecasting oscillators are currently bearish on .AXJO and have had this outlook for the last 27 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

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