Australia: S&P/ASX 200 (.AXJO) Set to Fall Monday

Australia: S&P/ASX 200 (.AXJO) Set to Fall Monday

Australia: S&P/ASX 200 (.AXJO) Set to Fall Monday

Australian shares appear set to fall at the start of the week, distancing themselves from the rally that lifted US stocks over the weekend.

ASX futures were 51 points or 0.9 per cent lower at 7am AEDT Saturday. The Australian dollar slipped 0.1 per cent.

The S&P/ASX 200 volatility index eased somewhat in Friday AEDT trade, sliding 6.5 per cent to 20.37 – still 88 per cent higher than where it was on September 28.

The All-Ordinaires has shed 7 per cent since August 30, albeit the biggest drop took place last week and the index edged 0.2 per cent higher on Friday.

Locally, the week ahead will focus on the Labour Force data on Thursday.

“After two months of the unemployment rate at 5.3 per cent, we’re picking a fall to 5.2 per cent in the September data (mkt: 5.3 per cent), alongside another strong employment print,” NAB markets economist Kaixin Owyong said.

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 6,128.54.

The projected upper bound is: 6,005.88.

The projected lower bound is: 5,771.96.

The projected closing price is: 5,888.92.

Candlesticks

A white body occurred (because prices closed higher 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 23 white candles and 27 black candles for a net of 4 black candles.

A bullish harami occurred (where the current small white body is contained within an unusually large black body). During a downtrend (which appears to be the case with S&P/ASX 200) this pattern implies an end to the decline as the bears appear to have exhausted themselves.

During an uptrend the bullish harami pattern is bearish as the bears appear to be gaining strength as the bulls weaken.

An on-neck line occurred. This is a bearish pattern where prices should move lower when the white candlestick’s (i.e., the most recent) low is penetrated.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 9.2511. 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 25.29. 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 79 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 -201.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 4 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 11.900 at 5,895.700. Volume was 41% above average (neutral) and Bollinger Bands were 97% wider than normal.

Open High Low Close Volume___
5,883.8005,904.0005,846.7005,895.700 815,561,984

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

Moving Averages: 10-period 50-period 200-period
Close: 6,077.71 6,209.31 6,079.35
Volatility: 18 12 12
Volume: 573,367,680 602,583,616 566,910,720

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 3.0% 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 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 26 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

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