Australia: S&P/ASX 200 (.AXJO) hint of a short-squeeze

Australia: S&P/ASX 200 (.AXJO) hint of a short-squeeze

Australia: S&P/ASX 200 (.AXJO) hint of a short-squeeze

The Australian sharemarket more than reversed early losses as dividend hunters bought the major banks, with further impetus coming from easing US-China trade war jitters.

The S&P-ASX 200 index opened 0.8 per cent down and spent the whole morning session in the red after the US S&P 500 index dropped 0.7 per cent last night.

But there was the hint of a short-squeeze and fear of missing out as the index took off in afternoon trade to close up 77 points, or 1.34 per cent, at 5805.1 as regional sentiment bounced after US President Donald Trump said the US could get a “great deal” on trade with China.

The Australian dollar recovered from overnight losses to trade slightly easier at US70.90¢ and government 10-year bond yields rose 1.5 points to 2.583 per cent.

Domestic investors shrugged off weak housing data and Morgan Stanley’s warning that Australia was the most exposed of developed market economies to high debt levels.

“We believe high household debt burdens will have cyclical and structural implications,” they said. “Growth headwinds will be felt in a deleveraging phase, even if a balance sheet recession is avoided, as consumption is forgone to pay down debt.”

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 6,026.08.

The projected upper bound is: 5,939.03.

The projected lower bound is: 5,652.00.

The projected closing price is: 5,795.51.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black 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 39.2055. This is not an overbought or oversold reading. The last signal was a buy 0 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 38.23. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -67. 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 16 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 76.900 at 5,805.100. Volume was 14% above average (neutral) and Bollinger Bands were 159% wider than normal.

Open High Low Close Volume___
5,728.2005,805.1005,691.7005,805.100 660,286,848

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

Moving Averages: 10-period 50-period 200-period
Close: 5,826.06 6,097.68 6,064.07
Volatility: 23 15 13
Volume: 634,089,152 622,729,536 579,946,624

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 4.3% 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 38 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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