Australia: S&P/ASX 200 (.AXJO) pullback in bank stocks

Australia: S&P/ASX 200 (.AXJO) pullback in bank stocks

Australia: S&P/ASX 200 (.AXJO) pullback in bank stocks

The local session could be characterised as being somewhat lacklustre: the lion’s share of the day’s losses came shortly after the open, volume was below average, and market breadth finished at 30%. Most sectors finished the day in the red, but naturally it was a pullback in bank stocks that contributed greatest to the markets falls. The materials space made a very humble play higher in afternoon trade it must be said, courtesy of a tick higher in iron ore prices, to sit near the top sectoral map by close. But at just shy 0.1%, the day’s recovery wasn’t anywhere near sufficient to salvage the day for the ASX 200.

As it presently stands: where goes bank stocks so goes the ASX 200. Not a revolutionary idea of course, given financials’ weighting in the Australian index. However, with buying impetus missing across the ASX currently, combined with overall bearish sentiment, the effects of the bank-trade are much more pronounced. Having popped higher from oversold levels last week, the financial sector pulled back in this week’s opening stanza by 0.76%, accounting for about 14 points of the ASX 200’s total losses. The down trend appears still intact for the financial sector, auguring poorly, as one ought to infer, for the Australian stock market.

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 6,073.02.

The projected upper bound is: 5,955.66.

The projected lower bound is: 5,712.28.

The projected closing price is: 5,833.97.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 59.9944. This is not an overbought or oversold reading. The last signal was a sell 0 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 29.85. 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 buy 4 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 -74. This is not a topping or bottoming area. The last signal was a buy 4 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 11 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -61.800 at 5,843.100. Volume was 3% above average (neutral) and Bollinger Bands were 146% wider than normal.

Open High Low Close Volume___
5,904.9005,905.4005,843.1005,843.100 595,137,664

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

Moving Averages: 10-period 50-period 200-period
Close: 5,910.53 6,156.36 6,072.41
Volatility: 20 13 12
Volume: 622,771,136 611,175,360 573,922,240

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 3.8% below its 200-period moving average and is in an downward 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 bearish on .AXJO and have had this outlook for the last 33 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

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