Australia: S&P/ASX 200 (.AXJO) shares are set to ease with a cautious start to the week

Australia: S&P/ASX 200 (.AXJO) shares are set to ease with a cautious start to the week

Australia: S&P/ASX 200 (.AXJO) shares are set to ease with a cautious start to the week

Australian shares are set to ease with a cautious start to the week as the US central bank’s pending policy decision is awaited.

ASX futures were down 7 points or 0.1% to 6667. The local currency edged 0.2% higher.

Australian government bond yields seem likely to spike higher as they catch up to a surge in both European and US yields over the weekend. The yield on the US 10-year Treasury leapt 12 basis points to 1.90%; it’s now back to where it was in early August.

On Wall Street, the three US benchmarks ended mixed in Friday trading though they each advanced on the week.

Equity investors may opt to hold close to the sidelines this week as they await further news on the tone of trade talks between the US and China, and most importantly, the Federal Reserve’s policy gathering.

The Fed is widely expected to pare its key rate target range by 25 basis points. There will be fresh forecasts, including the first look into 2020.

Trade tensions are weighing on growth across the world, but the International Monetary Fund is “far” from forecasting a global recession, an IMF official told Reuters on Friday, as the fund prepares to release a new economic outlook next month.

“While manufacturing activity has been weak, we also see resilience in the services sector and consumer confidence is holding up. The question is how long that resilience can last, and we are monitoring carefully all indicators,” said the official, who was not authorised to speak publicly.

Oxford Economics is less optimistic. “By combining outputs from three statistical models, we estimate the probability of a global recession in 2020 has increased in recent quarters to around 30%.

“Our estimate triangulates the output from three methods – a global recession probability model, our global growth distribution, and a simple Monte Carlo simulation. Reassuringly, they all return similar answers, although the picture could change quickly in the coming quarters.”

Overall, the bias in prices is: Upwards.

The projected upper bound is: 6,830.83.

The projected lower bound is: 6,504.29.

The projected closing price is: 6,667.56.

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 28 white candles and 22 black candles for a net of 6 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 75.2140. This is not an overbought or oversold reading. The last signal was a sell 1 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 58.37. 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 49 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 104.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 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 12 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 14.300 at 6,669.200. Volume was 3% above average (neutral) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
6,654.9006,676.5006,653.7006,669.200 673,878,912
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,619.05 6,623.90 6,258.36
Volatility: 8 16 14
Volume: 663,601,728 650,991,232 636,975,296

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 6.6% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .AXJO (mildly bullish). Our trend forecasting oscillators are currently bullish on .AXJO and have had this outlook for the last 5 periods.

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