Australia: S&P/ASX 200 (.AXJO) rebounded after a horror start to the week

Australia: S&P/ASX 200 (.AXJO) rebounded after a horror start to the week

Australia: S&P/ASX 200 (.AXJO) rebounded after a horror start to the week

Australian shares rebounded on Tuesday after a horror start to the week, but market watchers warn that volatility is likely to persist until there are signs of progress in containing the novel coronavirus.

After tumbling close to 4 per cent on the open following the 7.3 per cent rout on Monday, the benchmark S&P/ASX index quickly recouped those losses and more. The index eventually closed up 179 points, or 3.1 per cent, at 5939.6 for the largest single day gain in over three years.

At its lows for the session, the index extended its decline from the record highs hit last month to 23 per cent, breaching the threshold of a 20 per cent decline known as a technical “bear market”.

“A bear market in equities was probably not on anyone’s radar at the start of the year, but since then the outlook for earnings and economic growth has become much more cloudy,” said Kerry Craig, global market strategist at JP Morgan Asset Management.

The turnaround was supported by strong gains across banking, mining and technology stocks. Among the key risers were Commonwealth Bank, which rose 6.1 per cent to $73.37, BHP which gained 6.2 per cent to $29.25 and CSL which advanced 4.4 per cent to $308.97.

The lift in oil prices and speculation over increased fiscal stimulus measures in the United States also helped to lift government bond yields off their record lows, supporting buying in banking stocks after they plunged to multi-year lows on Monday.

Having been among the worst performers a session earlier, the information technology and materials sectors also enjoyed strong gains, the latter helped by firmer commodity prices.

Despite the turnaround on Tuesday, analysts warned that volatility is likely to persist.

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 6,639.23.

The projected upper bound is: 6,212.83.

The projected lower bound is: 5,631.08.

The projected closing price is: 5,921.96.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 20.2374. This is not an overbought or oversold reading. The last signal was a buy 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 25.06. 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 32 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 -148.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 3 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 up 179.000 at 5,939.600. Volume was 171% above average (trending) and Bollinger Bands were 374% wider than normal.

Open     High      Low     Close     Volume___
5,760.6005,939.6005,538.9005,939.6001,803,129,728
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 6,327.19 6,853.64 6,705.44
Volatility: 53 29 19
Volume: 1,229,036,032 721,250,816 656,966,016

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 11.4% 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 9 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.