Australia: S&P/ASX 200 (.AXJO) Share Market Ends Year With Investors Wiping Out $40 Billion in Value

Australia: S&P/ASX 200 (.AXJO) Share Market Ends Year With Investors Wiping Out $40 Billion in Value

Australia: S&P/ASX 200 (.AXJO) Share Market Ends Year With Investors Wiping Out $40 Billion in Value

While Forex traders were cheering the Australian Dollar’s breakout above the psychological 70 cents level on Tuesday, there was a bloodbath in the Australian stock market as traders swamped the Australian Stock Exchange with sell orders on the final day of the year, wiping $20 billion off the benchmark S&P/ASX 200 Index in the first fifteen minutes of trading.

At the end of the session, the S&P/ASX 200 Index was at 6684.10, down 120.80 or -1.78%.

Performance Metrics

The Australian All Ordinaries was down 119.20 points or 1.72% at 6802.40, equating to a net $40 billion loss of capitalization.

Overall, the S&P/ASX 200 surged 1037.7 points in 2019, or up 18.38%. This was its best year since its 30.9% climb in 2009.

For December the ASX200 lost 161.8 points, or 2.36%, in just its third losing month for the year.

It was flat for the quarter, with a 4.2 point loss.

Some investors acknowledged the steep drop in shares, but took it in stride. “Not a very good day, it was just indiscriminate selling, pure profit taking,” Bell Direct market analyst Jessica Amir was quoted as saying by the Sydney Morning Herald.

“But zooming out, it’s still our best annual gain in 10 years,” she added.

Sector Performance

The heavily weighted financial subindex fell 1.34% as shares of Australia’s Big Four banks saw losses. Australia and New Zealand Banking Group shed 0.69%, Commonwealth Bank of Australia fell 1.48%, Westpac slipped 0.7% and National Australia bank declined 1.04%.

Telecom and tech stocks were hit the worst, dropping 3%. The mining sector suffered the least losses, with the sector down 1.1% – buoyed by gold miners, the only group to rise.

For the year, Avita Medical posted the biggest gains, posting a massive 696% rise after its spray-on burn treatment was approved for use in the United States.

Money Laundering Accusations Hit Banking Sector

One of the biggest stories of the year came out of Australia and affected its banking sector.

In November, Australia’s Westpac Banking was accused of 23 million breaches of anti-money laundering rules, with a regulator saying the financial giant enabled payments from “high risk” countries and convicted child sex offenders.

The oversight failure at Australia’s second-largest bank led to “serious and systemic non-compliance” with anti-money laundering laws, financial crime watchdog AUSTRAC said in a court filing.

The regulator is pursuing fines of up to A$21 million ($14 million) for every transaction Westpac failed to monitor adequately or report on time.

Early 2020 Outlook

On Tuesday, IC Markets general manager Nick Twidale said, “… all the fundamentals are locked in for a strong start to the new year.”

Will the euphoria from the announcement of the Phase 1 trade deal continue into 2020? Or will it wear off once the details of the trade deal between the United States and China are revealed? Will China be able to comply with its agreement to buy U.S. agricultural products? Will the reduction of the tariffs move smoothly?

How will the rise in the Australian Dollar to a five-month high affect Australian exports? What if the Reserve Bank of Australia (RBA) postpones near-term rate cuts?

These are some of the important factors to consider when trying to predict the direction and performance of the Australian stock market in 2020.

I think the Aussie Dollars rise, the RBA delay in cutting rates further and some issues with U.S.-China trade relations will keep a lid on stock market performance in 2020.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 6,703.65.

The projected upper bound is: 6,833.32.

The projected lower bound is: 6,536.26.

The projected closing price is: 6,684.79.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 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 27.2035. This is not an overbought or oversold reading. The last signal was a sell 5 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 42.04. 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 124 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 15 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 -120.800 at 6,684.100. Volume was 49% below average (consolidating)(neutral) and Bollinger Bands were 7% wider than normal.

Open     High      Low     Close     Volume___
6,804.9006,804.9006,684.1006,684.100 314,213,376
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,808.78 6,744.98 6,569.20
Volatility: 15 14 14
Volume: 517,121,056 577,489,792 621,481,472

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 1.7% above its 200-period moving average and is in an upward 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 bullish on .AXJO and have had this outlook for the last 8 periods.

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