Australia: S&P/ASX 200 (.AXJO) plunges to lowest level since 2016 in brutal selloff
News the United States will temporarily suspend travel from Europe saw fears over a global recession escalate sharply on Thursday, leading to another brutal selloff in Australian shares which tumbled to the lowest level since in over three years.
The benchmark S&P/ASX 200 was walloped, tanking 421.3 points, or 7.4 per cent, to 5304.6, closing at the lowest level since November 2016. It’s now fallen 26.3 per cent from the record highs hit 15 sessions ago, logging it largest one-day percentage decline since the GFC, surpassing the 7.3 per cent drop recorded on Monday.
After falling over 2 per cent in early trade, losses accelerated following a speech from US president Donald Trump in which he announced a temporary ban on travel from Europe and failed to meet lofty investor expectations for additional fiscal stimulus measures to counteract the threat posed by the coronavirus outbreak.
The news saw the local market briefly slide more than 7.6 per cent, recording its largest intraday move since October 2008 while erasing over $120 billion off the value of the benchmark index.
Technical Indicators
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 6,530.61.
The projected upper bound is: 5,620.59.
The projected lower bound is: 4,933.43.
The projected closing price is: 5,277.01.
Candlesticks
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 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 20.6119. 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 16.92. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 34 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 -172.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 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 13 period(s) ago.
Rex Takasugi – TD Profile
S&P/ASX 200 closed down -421.300 at 5,304.600. Volume was 165% above average (trending) and Bollinger Bands were 436% wider than normal.
Open High Low Close Volume___
5,725.9005,725.9005,290.0005,304.6001,818,284,416
Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 6,093.64 6,804.47 6,696.44
Volatility: 64 36 22
Volume: 1,348,713,472 773,586,240 666,775,360
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 20.8% 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 11 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.
