Australia: S&P/ASX 200 (.AXJO) Improved market sentiment

Australia: S&P/ASX 200 (.AXJO) Improved market sentiment

Australia: S&P/ASX 200 (.AXJO) Improved market sentiment

The Australian sharemarket has closed the week higher, hitting a fresh 10-year high on the back of improved market sentiment and commodity prices.

Since Australia Day, the ASX200 has gained 4 per cent while the likes of the S&P500 in the US and the global MSCI index have gone backwards.

Whether that out-performance is justified, and if it can be maintained, may become clearer from this week as corporate Australia releases its June half earnings reports.

Earnings growth is looking strong, around 7 per cent, but some valuations are decidedly stretched.

Shares of energy and materials sectors were key contributor to the index rally, on the back of solid gains in crude oil and base prices. Base metal prices rose by up to 0.7% on the London Metal Exchange on Thursday with nickel up the most, exception being Zinc which was down by 0.1%.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,399.38.

The projected lower bound is: 6,209.26.

The projected closing price is: 6,304.32.

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 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 56.6751. This is not an overbought or oversold reading. The last signal was a sell 12 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 60.53. 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 24 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 132.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 12 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 9 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 55.700 at 6,300.200. Volume was 36% above average (neutral) and Bollinger Bands were 45% narrower than normal.

Open High Low Close Volume___
6,244.5006,302.3006,244.5006,300.200 756,565,952

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

Moving Averages: 10-period 50-period 200-period
Close: 6,252.45 6,147.75 6,010.83
Volatility: 11 10 11
Volume: 519,267,872 558,177,536 551,968,256

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 4.8% above 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 26 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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