Australia: S&P/ASX 200 (.AXJO) first time in a month that the index has finished in the green two days in a row
The broader All Ordinaries index also finished higher, closing 5.32 per cent higher at 5,006.20 points.
The late rally coincided with news from Washington that the US government had agreed to pass the anticipated US$2 trillion stimulus package.
The gains were pulled higher by Qantas which saw shares surge 24 per cent in early trade, and by a vote of confidence for Australia’s banks from ratings agency Standard and Poor’s.
In a briefing note this morning, S&P predicted a sharp correction for Australia’s property market but said the country’s banks should be safe.
“We consider that the fiscal and monetary support announced by the Australian authorities in the past two weeks, in combination with hardship relief measures announced by the banks, should cushion the blow from COVID-19 to property prices, and consequently the banking sector,” it said.
All four banks finished higher on Wednesday, with CommBank notching 9.47 per cent gains, NAB 9.65 per cent and ANZ 11.58 per cent gains. Westpac also saw gains of 9.24 per cent.
What happened this morning?
Australian markets have shot higher on Wednesday morning following the best day for the Dow Jones since 1933.
The S&P/ASX200 was up 6.05 per cent at 5,022.40 points as of 10:16am AEDT, while the All Ordinaries was up 6.06 per cent at 5,041.30 points.
It followed one of the best days on Wall Street since February as stocks lifted on hopes of a massive stimulus package.
What happened overnight?
This morning’s lift comes after the Dow Jones Industrial Average skyrocketed to its best day since 1933 on hopes of a huge US$2 trillion stimulus package.
The Dow rallied more than 11 per cent after it sold-off on Monday, erasing nearly all of the gains since President Donald Trump was elected.
“Sentiment has improved, but to call it a turning point is too strong a word for now,” James McCormick, global head of desk strategy at NatWest Markets said.
“It is more of a tug-of-war. Policy bazooka is in place, but will be fighting against very weak data and still worrying trends on Covid-19 data.”
The US Senate is still hammering out the details, however reportedly will include around US$500 billion in direct payments to people and US$350 billion in business loans.
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 6,087.88.
The projected upper bound is: 5,509.17.
The projected lower bound is: 4,522.22.
The projected closing price is: 5,015.69.
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 25 white candles and 25 black candles.
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.
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 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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 68.2056. This is not an overbought or oversold reading. The last signal was a buy 2 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 36.85. 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 buy 1 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 -26. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 23 period(s) ago.
Rex Takasugi – TD Profile
S&P/ASX 200 closed up 56.400 at 5,054.500. Volume was 75% below average (consolidating) and Bollinger Bands were 281% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 4,972.17 6,429.55 6,622.94
Volatility: 103 58 32
Volume: 1,586,878,720 997,817,536 713,180,480
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.
S&P/ASX 200 is currently 23.7% 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 21 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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