Australia: S&P/ASX 200 (.AXJO) shares are poised to catch an overseas New Year rally at the open

Australia: S&P/ASX 200 (.AXJO) shares are poised to catch an overseas New Year rally at the open

Australia: S&P/ASX 200 (.AXJO) shares are poised to catch an overseas New Year rally at the open

Australian shares are poised to catch an overseas New Year rally at the open, helped in part by a slide in the local currency.

ASX futures were up 48 points or 0.7% to 6672 near 5.50am AEDT. The local currency slid 0.5%.

Shares on Wall Street began 2020 as they ended last year, resetting record highs. The pan-European stocks index STOXX 600 jumped 0.9%.

In a note on its outlook for the S&P 500, Bank of America said it sees more upside, though nowhere near the 29% surge in 2019.

“We here update our target framework for the S&P 500, which suggests upside in 2020 of 2% (our 2020 year-end target is 3300) as we likely saw some of 2020’s gains pulled into 2019, and would expect more realistic returns in 2020.

“But our long-term bullish stance on US stocks is still supported by valuation. The multiple that investors pay for the S&P 500 is not a powerful near term indicator, but is almost all that matters in explaining long-term returns.

Today’s agenda

No local data

Overseas data: UK nationwide house prices December; US construction spending November, ISM manufacturing index December, Fed December policy meeting minutes

Fed speakers: Barkin, Kaplan, Daly, Brainard, Evans

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 6,703.02.

The projected upper bound is: 6,839.91.

The projected lower bound is: 6,542.81.

The projected closing price is: 6,691.36.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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.

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 16.4840. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 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 42.75. 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 125 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 -140.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 16 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 6.500 at 6,690.600. Volume was 50% below average (consolidating) and Bollinger Bands were 5% wider than normal.

Open     High      Low     Close     Volume___
6,684.1006,709.2006,669.2006,690.600 304,869,184
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,792.87 6,745.74 6,571.73
Volatility: 11 14 14
Volume: 482,517,600 573,457,408 620,372,672

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 1.8% above 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 0 periods.

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