Australia: S&P/ASX 200 (.AXJO) set to rise but economists remain wary

Australia: S&P/ASX 200 (.AXJO) set to rise but economists remain wary

Australia: S&P/ASX 200 (.AXJO) set to rise but economists remain wary

The Australian share market is tipped to rise but economists remain wary of the coronavirus volatility that ensured global equities ended the week on a sour note.

Wall Street’s main indexes fell more than 1.5 per cent on Friday after US employment showed a worse-than-expected drop in jobs amid the COVID-19 pandemic.

CommSec chief economist Craig James said the US market, and the expected raft of news about COVID-19 on Monday, would continue influence Australian shares.

IG Markets analyst Kyle Rodda said the key remains the trajectory of new coronavirus cases.

“Just as is the case for everyone currently, market participants’ decision-making centres on what success health authorities – especially those in Europe and the US – are having in “flattening the curve” of new COVID-19 cases,” Rodda said.

“Globally, the curve continues to rise, as the number of infections of the disease approached 1.2 million over the weekend. The United States has arguably become the epicentre for the virus now. It’s caseload has jumped beyond 300,000, with new cases in the US still increasing exponentially.”

The S&P/ASX200 benchmark index finished Friday down 86.8 points, or 1.68 per cent, having also been tipped to rise in early trade.

Despite recording back-to-back sessions in the red, the local bourse still rose 4.6 per cent over the five sessions for its best weekly gain since December 2011.

Oil prices rose after US President Donald Trump’s on Saturday said he will put tariffs on Saudi and Russian production, potentially accelerating a meeting between the two.

Gold is also higher – buying $US1,615.76 per ounce.

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 6,002.37.

The projected upper bound is: 5,797.76.

The projected lower bound is: 4,703.69.

The projected closing price is: 5,250.73.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 58.6183. This is not an overbought or oversold reading. The last signal was a buy 9 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 46.38. 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 8 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 96. This is not a topping or bottoming area. The last signal was a buy 9 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 buy 7 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 219.300 at 5,286.800. Volume was 8% above average (neutral) and Bollinger Bands were 60% wider than normal.

Open     High      Low     Close     Volume___
5,067.5005,302.2005,067.5005,286.800 912,701,376
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 5,071.49 6,156.83 6,570.52
Volatility: 73 65 35
Volume: 1,205,875,840 1,108,312,576 730,858,240

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 19.5% 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 28 periods.

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