Australia: S&P/ASX 200 (.AXJO) Miners lead market gains in volatile day

Australia: S&P/ASX 200 (.AXJO) Miners lead market gains in volatile day

Australia: S&P/ASX 200 (.AXJO) Miners lead market gains in volatile day

Australian shares opened the week’s trading higher on Monday despite dipping into the red twice through the middle of the day as the market extended volatility from last week.

The Fortescue Metals Group Limited (ASX: FMG) share price has continued its stunning form and is the best performer on the ASX 200 on Monday.

In early afternoon trade the iron ore producer’s shares are up 3.5% to a two-year high of $6.72.

The key driver of its 60% gain this year has been the dam disaster at Vale’s operation in Brazil earlier this year.

At the time, Vale warned that it could pull as much as 40 million tonnes out of the iron ore market because of the disaster. As this is a significant amount of global production, it has led to supply concerns and pushed iron ore prices notably higher.

In fact, on Friday low grade iron ore prices hit multi-year highs. According to Metal Bulletin, the price of 58% fines rose 1.5% to US$70.38 a tonne.

This latest rally appears to have been caused by a decline in steel prices, leading to increased demand for lower cost 58% fines from steel producers in order to support margins.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,295.10.

The projected lower bound is: 6,108.74.

The projected closing price is: 6,201.92.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white 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 49.8477. 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 60.18. 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 6 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 -16. This is not a topping or bottoming area. The last signal was a sell 6 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 6 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 15.300 at 6,190.500. Volume was 9% below average (neutral) and Bollinger Bands were 51% narrower than normal.

Open High Low Close Volume___
6,175.2006,201.5006,167.3006,190.500 578,017,152

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

Moving Averages: 10-period 50-period 200-period
Close: 6,197.41 6,015.87 6,020.10
Volatility: 9 10 14
Volume: 711,703,296 633,437,056 606,850,176

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 2.8% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 49 periods.

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