Australia: S&P/ASX 200 (.AXJO) poised to follow Wall Street when it resumes trading this morning

Australia: S&P/ASX 200 (.AXJO) poised to follow Wall Street when it resumes trading this morning

Australia: S&P/ASX 200 (.AXJO) poised to follow Wall Street when it resumes trading this morning

Wall Street’s main indexes fell more than 1 per cent on Monday as investors worried about the economic fallout of a virus outbreak in China that has prompted the country to extend the Lunar New Year holidays and businesses to close some operations.

The benchmark S&P 500 was jolted off record highs last week as China locked down several cities and curbed travel, reminding investors of the deadly SARS virus that killed nearly 800 people in 2002-03 and cost the global economy billions.

Travel-related stocks, including airlines, casinos and hotels, were the worst-hit on Wall Street, while shares of sectors exposed to China’s growth, including technology, materials and energy, pressured the markets.

The Australian sharemarket is poised to follow suit when it resumes trading this morning, with futures at 5.55am AEDT pointing to a fall of 64 points, or 0.9 per cent, at the opening bell.

The S&P 500 dropped 1.28 per cent to 3,253.17 and the Nasdaq Composite declined 1.58 per cent to 9,167.40. The indexes were on track to post their biggest single-day percentage loss since October.

Wall Street’s fear gauge, the CBOE Volatility index, jumped to its highest since October 10.

Technology and internet heavyweights that have powered the recent rally including Apple, Microsoft, Alphabet and Amazon.com dropped between 1.6 per cent and 3 per cent.

Wynn Resorts, Melco Resorts & Entertainment and Las Vegas Sands, which have large operations in China, slid between 3.7 per cent and 7 per cent. The NYSE Arca Airline index dropped 3.8 per cent.

Fourth-quarter earnings will kick into high gear this week with 141 of the S&P 500 companies, including Apple, Microsoft and Boeing, expected to report.

No.1 US homebuilder D.R. Horton Inc rose 2.2 per cent after raising the upper end of its forecast for full-year home sales.

Declining issues outnumbered advancers for a 3.85-to-1 ratio on the NYSE and a 2.69-to-1 ratio on the Nasdaq.

The S&P index recorded 17 new 52-week highs and 12 new lows, while the Nasdaq recorded 30 new highs and 84 new lows.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 6,858.67.

The projected upper bound is: 7,253.53.

The projected lower bound is: 6,940.97.

The projected closing price is: 7,097.25.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.

An inverted hammer occurred. If this occurs during a downtrend it implies a reversal. Look for a confirmation of the reversal on the 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).

A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend(which appears to be the case with S&P/ASX 200) the long upper shadow indicates that the bears are gaining control and a top may occur.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 65.5510. This is not an overbought or oversold reading. The last signal was a sell 1 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 67.65. 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 1 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 82. This is not a topping or bottoming area. The last signal was a sell 1 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 11 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 2.500 at 7,090.500. Volume was 17% below average (neutral) and Bollinger Bands were 113% wider than normal.

Open     High      Low     Close     Volume___
7,088.0007,122.7007,085.7007,090.500 477,556,000
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,042.36 6,826.41 6,632.92
Volatility: 9 15 14
Volume: 505,322,400 546,261,312 610,143,872

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 6.9% 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 11 periods.

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