Australia: S&P/ASX 200 (.AXJO) Expected to edge higher

Australia: S&P/ASX 200 (.AXJO) Expected to edge higher

Australia: S&P/ASX 200 (.AXJO) Expected to edge higher

Australia’s stock market closed 1.3 per cent lower today with the S&P/ASX200 at 6923.3 points and the All Ords falling 101 points lower, a decline of 1.4 per cent, at 7019.9 points.  The indices dropped as much as 1.7 per cent on the open before firming up in the early afternoon. 

The energy sector was the worst performer, down 4 per cent, as stocks in oil companies and oil industry services tumbled. Worley fell 8.5 per cent to $13.95, and Oil Search dropped 7.2 per cent to $6.72 after the Papua New Guinea government walked away from talks with Oil Search’s joint venture partner Exxon over its liquefied natural gas expansion plans, threatening a broader $20 billion gas export program. Perenti Global dropped 6.2 per cent to $1.44, and NRW Holdings fell 5.7 per cent to $2.95. 

The materials sector declined 2.2 per cent with BHP falling nearly 3 per cent, Rio Tinto falling 1.9 per cent, and Fortescue Metals closed 3.4 per cent lower at $11 after falling to $10.81 during the opening sell-off. 

Companies with a broad exposure to Chinese consumers were sold-off amid concerns about the  impact of travel bans imposed to reduce the spread of the Coronoa Virus and a slow down in the Chinese economy. International education company IDP Education dropped 6.7 per cent, and Treasury Wines hit a one-year low of $12.30. 

Utilities out-performed by ending the day 0.1 per cent higher, thanks to a 0.9 per cent gain gas pipeline owner APA Group. Healthcare, real estate, and consumer staples also out-performed. Woolworths managed to hit a new high during trading of $42, but closed at $41.82. 

The Australian dollar closed higher at US67.02¢, while China’s yuan fell against the greenback and was at 7-yuan-per-dollar on Monday for the first time since Christmas Eve. 

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 6,865.92.

The projected upper bound is: 7,088.15.

The projected lower bound is: 6,762.81.

The projected closing price is: 6,925.48.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white 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 23.5803. This is not an overbought or oversold reading. The last signal was a sell 6 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 47.77. 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 6 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 -137.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 3 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -93.900 at 6,923.300. Volume was 10% above average (neutral) and Bollinger Bands were 47% wider than normal.

Open     High      Low     Close     Volume___
7,017.2007,017.2006,897.0006,923.300 617,572,864
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,043.19 6,849.74 6,651.62
Volatility: 14 15 14
Volume: 579,308,480 555,092,096 613,524,800

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 4.1% 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 16 periods.

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