Australia: S&P/ASX 200 (.AXJO) poised to open lower

Australia: S&P/ASX 200 (.AXJO) poised to open lower

Australia: S&P/ASX 200 (.AXJO) poised to open lower

Australian shares are poised to open lower, with the iron ore majors likely to pace losses.

Iron ore dropped sharply on Friday after Chinese steel mills requested a probe into this year’s price surge. The spot price of the steel-making material fell 5.9 per cent, according to Fastmarkets MB.

The London and New York listed shares of both Rio Tinto and BHP fell too. In New York, Rio dropped 5.2 per cent, while BHP lost 3.9 per cent.

Also denting sentiment for the mining sector were smaller falls in copper, aluminium and gold.

Gold lost some of its lustre after the June US jobs report was far better than expected – 224,000 new jobs v expectations of 160,000 – leading traders to rethink the outlook for rate cuts by the Federal Reserve.

“There is no doubt that Fed officials took some comfort from the better-than-anticipated June employment report which painted the picture of a resilient economy that may need less of an immunisation boost than investors have been prescribing,” Oxford Economics’ Lydia Boussour said.

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 6,448.42.

The projected upper bound is: 6,876.11.

The projected lower bound is: 6,641.25.

The projected closing price is: 6,758.68.

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 29 white candles and 21 black candles for a net of 8 white candles.

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 88.8286. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 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 71.22. This is where it usually tops. 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 10 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 216.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 9 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 0 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 33.300 at 6,751.300. Volume was 9% below average (neutral) and Bollinger Bands were 15% wider than normal.

Open High Low Close Volume___
6,718.0006,769.6006,714.8006,751.300 579,053,760

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

Moving Averages: 10-period     50-period     200-period
Close: 6,670.51 6,470.15 6,082.40
Volatility: 7 12 14
Volume: 634,342,016 640,725,120 628,365,248

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 11.0% 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 18 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an overbought condition. 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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