Australia: S&P/ASX 200 (.AXJO) Employment conditions weakening

Australia: S&P/ASX 200 (.AXJO) Employment conditions weakening

Australia: S&P/ASX 200 (.AXJO) Employment conditions weakening

But jobs growth appears to be swimming against the tide and forward looking indicators are sinking.

Shayne Heffernan said “Australia is overtaxed, the minimum wage is too high and the social security problem is weighing on the taxpayer, Australia has seen the dollar at overly high levels for sometime, a return to the lows 60s high 50s is on the cards”.

The ANZ job ads series point to employment growth slipping below 2 per cent, and weak business and consumer surveys make for far-from-happy reading.

The big employment sectors, retail and construction, are falling into contractionary territory.

The employment component of the NAB business conditions survey is still marginally positive, but it has fallen a fair way from the bullish sentiment in the first half of last year.

“The shift is clearly starting to affect businesses willingness to hire and invest,” Mr Hassan said.

Similarly, Westpac’s consumer survey has found pessimism has again trumped optimism, with concerns about job security rising sharply last month.

“Both job loss concerns and rising risk aversion raise the risk of a further move by households to rein in spending and increase savings, all of which would be consistent with our expectation of a significant ‘wealth effect’ drag on demand,” Mr Hassan observed.

In the short term a month’s data is unlikely to change the RBA’s view (unless it is an unmitigated disaster), but the case for cuts are mounting according to Mr Hassan, and may build further after Thursday.

“We still see the situation favouring a first 25 basis point rate cut from the RBA coming in August, once the extent of spill-overs from the housing downturn, on the labour market in particular, become more apparent, with a follow-up 25 basis point cut in November.”

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,279.81.

The projected lower bound is: 6,092.27.

The projected closing price is: 6,186.04.

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 30 white candles and 20 black candles for a net of 10 white candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

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 35.6841. This is not an overbought or oversold reading. The last signal was a buy 1 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 58.25. 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 5 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 -19. This is not a topping or bottoming area. The last signal was a sell 5 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 -4.400 at 6,175.200. Volume was 86% above average (neutral) and Bollinger Bands were 46% narrower than normal.

Open High Low Close Volume___
6,179.6006,197.4006,171.2006,175.2001,173,805,440

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

Moving Averages: 10-period 50-period 200-period
Close: 6,200.10 6,004.45 6,019.28
Volatility: 9 10 14
Volume: 711,466,688 631,393,152 606,529,280

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 2.6% 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 moderate flows of volume into .AXJO (mildly bullish). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 48 periods.

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