Australia: S&P/ASX 200 (.AXJO) every sector gaining as weak economic data was seen to boost the odds of a February cash rate cut

Australia: S&P/ASX 200 (.AXJO) every sector gaining as weak economic data was seen to boost the odds of a February cash rate cut

Australia: S&P/ASX 200 (.AXJO) every sector gaining as weak economic data was seen to boost the odds of a February cash rate cut

The Australian sharemarket has enjoyed its best day in three weeks, with every sector gaining as weak economic data was seen to boost the odds of a February cash rate cut.

The benchmark S&P-ASX 200 index closed Tuesday up 90.7 points, or 1.35 per cent, to 6826.4, while the broader all ordinaries was up 86.2 points, or 1.26 per cent, to 6943.6.

“It was another good day, much like yesterday, it built consistently over the course of the day,” said CommSec market analyst Tom Piotrowski. “The only caveat is that the volume is very low.”

The ASX’s Rate Indicator shows that the market’s odds of a rate cut have grown steadily in the last two weeks, with traders now predicting there is a better than 50-50 chance the Reserve Bank will cut rates on February 4.

The health care sector was up the most on Tuesday, gaining 2.0 per cent as CSL rose 2.4 per cent to $283.42.

PolyNovo climbed 11.6 per cent to $2.03 after reporting sales of its synthetic wound care dressing hit $2 million in December, up 134 per cent from a year ago, while biotech Mesoblast rose 6.5 per cent.

Wesfarmers gained 2.1 per cent to hit an all-time high of $43.07, while Coca- Cola Amatil rose 4.9 per cent hit a five-year high of $11.54.

Gold stocks retreated after Monday’s strong gains, with Newcrest falling 1.9 per cent, Evolution dipping 2.3 per cent and Northern Star down 1.7 per cent.

Elsewhere in the mining sector, BHP rose 0.4 per cent to $39.55, Rio Tinto gained 0.6 per cent to $101.74 and South32 rose 2.9 per cent to $2.80.

Lithium miners continued their rise after a major Chilean lithium producer delayed a mine expansion plan, with Orocobre rising 7.0 per cent, Galaxy Resources gaining 8.7 per cent and Pilbara Minerals climbing 6.8 per cent.

Property developer Ingenia Communities Group dropped 3.8 per cent after forecasting that the NSW bushfires would cause at least $2 million in lost business at its South Coast tourism parks, although insurance should cover some of that.

All the big banks were higher, with Commonwealth rising 1.8 per cent to $81.20, NAB up 1.4 per cent to $24.90, ANZ gaining 1.3 per cent to $24.95, and Westpac up 1.2 per cent to $24.62.

Afterpay competitor Sezzle soared 41.9 per cent to $1.93, recovering most of last week’s losses, after expressing confidence it would receive a previously denied California lending licence.

Late in the afternoon the Australian dollar dipped to a nearly two-week low against its US counterpart, buying 69.17 US cents, down from 69.38 US cents at Monday’s close.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,705.11.

The projected upper bound is: 6,982.93.

The projected lower bound is: 6,675.19.

The projected closing price is: 6,829.06.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 60.4914. 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 56.09. 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 128 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 16. This is not a topping or bottoming area. The last signal was a buy 0 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 4 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 90.700 at 6,826.400. Volume was 25% below average (neutral) and Bollinger Bands were 11% narrower than normal.

Open     High      Low     Close     Volume___
6,735.7006,834.3006,735.7006,826.400 447,411,936
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,769.25 6,750.87 6,580.57
Volatility: 15 15 14
Volume: 401,923,520 565,218,496 616,064,256

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 3.7% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 3 periods.

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