Australia: S&P/ASX 200 (.AXJO) Investors are bracing for the worst day for Australian shares this year

Australia: S&P/ASX 200 (.AXJO) Investors are bracing for the worst day for Australian shares this year

Australia: S&P/ASX 200 (.AXJO) Investors are bracing for the worst day for Australian shares this year

Investors are bracing for the worst day for Australian shares this year, on escalating fears about the damage to economic growth from the deadly coronavirus.

China said on Sunday the death toll from the virus had risen to 304, with 14,380 reported cases. The 2590 new cases and 45 additional deaths suggest there has been no slowdown in the rate of infections, which have now shown up in 23 countries.

Other countries are imposing travel restrictions as the virus continues to spread. Australia has barred foreign arrivals from China and warned its citizens not to travel to mainland China. Qantas has joined a growing number of global airlines suspending services to mainland China.

The ASX is set to tumble when trading starts on Monday, with futures pointing to a 1.7 per cent, or 119 point, drop in the S&P/ASX 200 index as investors try to gauge the impact of the virus on economic growth.

The Reserve Bank of Australia will meet to decide on interest rates on Tuesday but isn’t expected to make a change to the 0.75 per cent cash rate.

Attention is now starting to focus on how China’s financial regulators will react to the virus and the tools it will use to support economic growth.

People’s Bank of China vice-governor Pan Gongsheng said at the weekend that regulators would provide “adequate liquidity, strengthen counter-cyclical adjustments and keep stable interest rates” to support the markets.

“If China wants to prop up growth and it goes the infrastructure-based model, which they were already starting to do at the end of last year, that could be a positive for steel production,”  said Citi’s mining sector analyst Paul McTaggart.

“That may actually move iron ore prices, but it’s too early to make that call.” he added.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,864.07.

The projected upper bound is: 7,180.62.

The projected lower bound is: 6,863.79.

The projected closing price is: 7,022.21.

Candlesticks

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 31 white candles and 19 black candles for a net of 12 white candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

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 32.2006. This is not an overbought or oversold reading. 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 57.22. 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 5 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 -12. This is not a topping or bottoming area. 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 sell 2 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 8.800 at 7,017.200. Volume was 34% above average (neutral) and Bollinger Bands were 66% wider than normal.

Open     High      Low     Close     Volume___
7,008.4007,046.7007,008.4007,017.200 756,353,088
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,057.27 6,847.56 6,648.28
Volatility: 12 15 14
Volume: 567,583,296 553,984,000 613,284,864

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 5.5% above its 200-period moving average and is in an upward trend. Volatility is low 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 15 periods.

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