Australia: S&P/ASX 200 (.AXJO) set for heavy falls

Australia: S&P/ASX 200 (.AXJO) set for heavy falls

Australia: S&P/ASX 200 (.AXJO) set for heavy falls

The S&P 500 and Dow suffered their worst tumbles in over a month on Tuesday after data showed US factory activity shrank in September to its weakest in over a decade, ratcheting up fears that the US-China trade war is hobbling the world’s largest economy.

The slide is set to feed through to the Australian sharemarket, with futures at 7:20am AEST pointing to a fall of 75 points, or 1.1 per cent, at the open.

Investors moved to the safety of US Treasuries after the ISM report showed its manufacturing activity index at 47.8, falling further from August’s sharp contraction and below economists’ expectations of 50.1. A reading below 50 indicates contraction.

As the final quarter of 2019 kicks off, investors will be focusing on a range of factors, beginning with the high-stakes Sino-US trade talks in early October, corporate earnings and the Fed’s next policy meeting.

Declining issues outnumbered advancing ones on the NYSE by a 2.76-to-1 ratio; on Nasdaq, a 3.29-to-1 ratio favored decliners.

The S&P 500 posted 12 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 28 new highs and 131 new lows.

Volume on US exchanges was 7.3 billion shares, compared with the 7.2 billion average for the full session over the last 20 trading days.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,615.04.

The projected upper bound is: 6,903.64.

The projected lower bound is: 6,582.69.

The projected closing price is: 6,743.16.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 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 51.8109. This is not an overbought or oversold reading. The last signal was a sell 7 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 59.94. 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 61 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 54. This is not a topping or bottoming area. The last signal was a sell 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 1 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 54.500 at 6,742.800. Volume was 9% below average (neutral) and Bollinger Bands were 38% narrower than normal.

Open     High      Low     Close     Volume___
6,688.3006,743.7006,687.8006,742.800 612,736,896
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,716.35 6,631.09 6,320.59
Volatility: 9 16 13
Volume: 718,478,528 693,296,640 637,772,288

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 6.7% 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 17 periods.

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