Australia: S&P/ASX 200 (.AXJO) rebounds on trade hopes after brutal two-day sell-off

Australia: S&P/ASX 200 (.AXJO) rebounds on trade hopes after brutal two-day sell-off

Australia: S&P/ASX 200 (.AXJO) rebounds on trade hopes after brutal two-day sell-off

Australian shares recovered after suffering their largest two-day slide since early August, boosted by a report suggesting a trade deal between the United States and China may still be reached before the next wave of proposed US tariffs begin on December 15.

The benchmark S&P/ASX 200 Index rose sharply by 76.5 points, or 1.2 per cent, to close at 6683.0, recouping about a third of the losses from the previous two sessions.

According to unnamed sources who spoke to Bloomberg, the key sticking points in trade negotiations were centred on how to guarantee China’s purchases of US agricultural goods along with what existing tariffs were to be rolled back.

“Having thought last week that most markets had given up on playing trade headline ping-pong, price action over the last 24 hours shows this patently not to be the case,” National Australia Bank head of FX strategy Ray Attrill told clients.

“To date, it has only been the Chinese side who have been talking about a tariff rollback as likely to form part of any phase one trade agreement,” he said. “Here the US side is acknowledging that this is on the table.”

The report was leapt on by local investors after several days of heavy losses, helping to push every sector on Australia’s benchmark index higher for the session. Energy, assisted by a 4 per cent spike in crude oil prices on Wednesday, led the gains with an increase of 1.6 per cent.

Relief that new bank capital requirements in New Zealand were less onerous than markets had feared saw Australia’s big four banks rally, pushing financials higher by 1.4 per cent.

Technical Indictors

Overall, the bias in prices is: Sideways.

The projected upper bound is: 6,845.08.

The projected lower bound is: 6,521.14.

The projected closing price is: 6,683.11.

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 32 white candles and 18 black candles for a net of 14 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 14.7892. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 2 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 45.98. 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 108 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 -116.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 2 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 1 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 76.500 at 6,683.000. Volume was 11% below average (neutral) and Bollinger Bands were 7% narrower than normal.

Open     High      Low     Close     Volume___
6,606.5006,684.6006,606.5006,683.000 572,132,864
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,765.34 6,696.73 6,522.13
Volatility: 20 15 13
Volume: 633,924,864 589,251,904 635,744,704

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 2.5% above 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 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 1 periods.

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