Australia: S&P/ASX 200 (.AXJO) set to fall after US rate rise

Australia: S&P/ASX 200 (.AXJO) set to fall after US rate rise

Australia: S&P/ASX 200 (.AXJO) set to fall after US rate rise

Australian shares are set to open lower on Thursday after a fresh rate hike by the US Federal Reserve sent Wall Street stocks deep into the red.

The Aussie dollar has extended its losses, hitting a new seven-week low 71 US cents.

The SPI200 futures contract was down 28 points, or 0.5 per cent, to 5,570.0, at 8am on Thursday, pointing to an opening drop for the benchmark ASX/200 after Wall Street fell hard in late overnight trade.

Global markets gave up earlier gains after the Fed announced the rate rise and flagged “some” further rate hikes would be necessary in the year ahead.

Fed on tap: It’s a commentary written on the fly this morning, as developments out of this morning’s US Federal Reserve meeting are being digested by markets. The Fed has hiked rates just as they were expected to do, with market participants now trawling through the fine print in the Fed’s commentary.

We were expecting a “dovish hike”; what we got looks like a “less-dovis- than-expected-hike”. The dot plots were revised as presumed: the Fed has told the markets that it expects interest rates to be lifted twice in 2019, rather than the three times implied in the September dot plots. It also downgraded its growth expectations and hinted unemployment is likely to pick up in the medium term. Overall, though, at first glance this looks like a Fed reasonably content with their policy position, as well as the position of the US economy.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 5,665.36.

The projected lower bound is: 5,331.11.

The projected closing price is: 5,498.24.

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 25 white candles and 25 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 9.9262. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 6 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 36.23. 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 buy 37 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 -151.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 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 0 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -74.800 at 5,505.800. Volume was 76% above average (neutral) and Bollinger Bands were 7% narrower than normal.

Open High Low Close Volume___
5,580.6005,587.6005,505.8005,505.8001,119,784,064

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

Moving Averages: 10-period 50-period 200-period
Close: 5,606.12 5,752.73 6,019.07
Volatility: 21 19 13
Volume: 715,238,208 653,430,656 591,663,040

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 8.5% 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 10 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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