Australia: S&P/ASX 200 (.AXJO) pointing to an early bounce

Australia: S&P/ASX 200 (.AXJO) pointing to an early bounce

Australia: S&P/ASX 200 (.AXJO) pointing to an early bounce

The Australian share market has given up nearly all of its early gains, just barely extending its winning streak to six days ahead of busy week for economic data.

After being up by as many as 27 points in the morning, the benchmark S&P/ASX200 index finished Monday just 1.5 points higher, to 6,740.7 points.

The broader All Ordinaries also closed up 1.5 points, or 0.02 per cent, to 6,842.5 points.

“We were off to a pretty good start, but the markets given up most of the gains,” said Burman Investment Management portfolio manager Julia Lee.

Volumes were normal but traders were apparently non-committal ahead of a busy week of macroeconomic news, Ms Lee said.

Items on the calendar include a speech by Reserve Bank of Australia Governor Philip Lowe on Tuesday night; Australian inflation data for September set to be released on Wednesday; and a raft of US economic data and corporate earnings reports.

Investors are watching closely for signs on whether the RBA will decide to cut the cash rate again next week on Melbourne Cup Day, although the market is only pricing in a 22 per cent chance of that happening, according to the ASX’s RBA Rate Indicator.

The energy, materials and industrials sectors were the biggest winners on Monday, up between 0.5 and 0.6 per cent.

Mining giant BHP gained 1.1 per cent to $36.17 while Rio Tinto climbed 0.5 per cent to $91.25, and Fortescue Metals gained 2.2 per cent to $9.01 amid rising iron ore prices.

Recycling company Sims Metal Management dragged down the materials sector, however, after announcing it expected a first-half loss of $20 million to $30 million due to a crash in the price of scrap metal.

Sims shares closed down 8.8 per cent to a three-year low of $9.20.

Lithium miners were higher after indigenous demonstrators in Chile blocked access to a huge desert salt basin that’s home to two of the world’s top lithium producers amid nationwide protests over inequality.

Pilbara Minerals gained 10.7 per cent, Galaxy Resources climbed 6.6 per cent and Orocobre gained 5.6 per cent.

Fuel refiner and Shell station owner Viva Energy buoyed the energy sector, however, after announcing retail petrol sales were up 1.4 per cent in the quarter, compared to the same time ago.

Viva shares closed up 3.6 per cent to a two-month high of $2.04, and Caltex shares were up 1.6 per cent to $28.12

Beach Energy rose 2.1 per cent to $2.40 after announcing a new onshore gas discovery 230km north of Perth, 16km from where Strike Energy found gas at its West Erregulla-2 well in September.

Beach compared the find to the Waitsia-4 well, which led to the buyout of gas junior AWE by Japan’s Mitsui for $602 million last year.

The consumer staples sector was the biggest loser, down 0.7 per cent after Coles fell 2.7 per cent to $14.56.

The big banks were mostly lower, with Commonwealth down 0.3 per cent to $80.48, Westpac down 0.2 per cent to $28.99, NAB down 0.1 per cent to $29.15 and ANZ flat at $28.03.

Rural Funds Group was up 2.3 per cent after announcing it would sell its network of 17 poultry farms for $72 million.

Worley, which changed its name from WorleyParsons last week, was up 0.7 per cent after announcing it had acquired a UK-based offshore wind energy installation and maintenance firm business for $38 million.

The Aussie dollar is buying 68.15 US cents, from 68.21 US cents on Friday.

ON THE ASX:

* The benchmark S&P/ASX200 index closed up 1.5 points, or 0.02 per cent, to 6,740.7 points

* The All Ordinaries closed up 1.5 points, or 0.02 per cent, to 6,842.5 points.

* The SPI200 futures index closed up three point, or 0.04 per cent, to 6,718.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,626.80.

The projected upper bound is: 6,881.99.

The projected lower bound is: 6,610.35.

The projected closing price is: 6,746.17.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 34 white candles and 16 black candles for a net of 18 white candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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).

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 86.3687. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 59.76. 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 80 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 138.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 14 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 buy 9 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 1.500 at 6,740.700. Volume was 24% below average (neutral) and Bollinger Bands were 5% narrower than normal.

Open     High      Low     Close     Volume___
6,739.9006,766.2006,739.8006,740.700 486,254,912
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,689.42 6,626.88 6,415.15
Volatility: 10 13 13
Volume: 599,981,952 650,882,240 637,821,376

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 5.1% 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 0 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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