Australia: S&P/ASX 200 (.AXJO) heading towards a higher open

Australia: S&P/ASX 200 (.AXJO) heading towards a higher open

Australia: S&P/ASX 200 (.AXJO) heading towards a higher open

Australian shares are heading towards a higher open on optimism progress is being made between US and Chinese officials at trade talks in Beijing. ASX futures were 20 points higher at 8.45am AEDT, extending earlier modest gains.

“We maintain our view that both sides have every incentive to strike an agreement as soon as possible, though potentially the 90-day talks period will be extended beyond March 1, when it is currently set to expire,” Pantheon Macroeconomics’ chief Asia economist Freya Beamish said in a note. “Our reading of the events, so far, is that talks will move up a notch in the coming weeks.”

Local data: AiG performance of services December, Building approvals November, ABS job vacancies November

NAB on the pending construction data: “Building Approvals, ever-volatile, have recently seen a downtrend in both house and apartment approvals. In November, these trends are likely to continue, although NAB expects a small rebound in apartment approvals (+3.5% m/m) to more-than-offset a modest reversal in House approvals (-0.8% m/m). Taken together, NAB expects Approvals ticked up 1% m/m (-24% y/y).”

Overseas data: Euro zone unemployment rate November; US Fed December policymeeting minutes

Capital Economics on the pending Fed minutes: “… we suspect that the minutes for the December FOMC meeting may strike a more dovish tone, stressing the uncertainty surrounding the Fed’s plan for further interest rate hikes this year. With economic growth set to hold up fairly well in the near term we continue to expect up to two more rate hikes in the first half of this year. But a renewed plunge in the stock market or more serious disruption resulting from the government shutdown would probably take any further hikes off the table.”

Overall, the bias in prices is: Sideways.

The projected upper bound is: 5,947.36.

The projected lower bound is: 5,613.77.

The projected closing price is: 5,780.56.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 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 91.6768. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 59.33. 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 48 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 170.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 7 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 55.900 at 5,778.300. Volume was 10% below average (neutral) and Bollinger Bands were 6% narrower than normal.

Open High Low Close Volume___
5,722.4005,781.4005,722.4005,778.300 554,135,552

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 5,638.62 5,703.21 6,002.49
Volatility: 18 19 14
Volume: 416,292,096 621,797,376 586,375,744

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% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .AXJO at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 2 periods.

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