Home Asia Australia Australia: S&P/ASX 200 (.AXJO) shares are set to recoup some

Australia: S&P/ASX 200 (.AXJO) shares are set to recoup some


Australia: S&P/ASX 200 (.AXJO) shares are set to recoup some

Australian shares are set to recoup some of Tuesday’s losses at the open as China expands its effort to contain the coronavirus. Equities in both Europe and on Wall Street are rebounding.

ASX futures were up 42 points or 0.6% to 6981 near 4.45am AEDT. The local currency slipped 0.2%.

“China’s actions [to contain the crisis] seem to have satisfied investors for now,” LPL Research said in a note. “While we don’t want to minimise human losses, history tells us the economic and market impact of a catalyst like this could be limited.”

Shortly after midday in New York, the S&P 500 was 1.2% higher; the Dow advanced 0.9% and the Nasdaq was up 1.4%. Shares closed higher across Europe.

The yield on the US 10-year note rose 4 basis points to 1.64%.

Today’s agenda

Local: Leading index December, Consumer price index fourth quarter

RBC Capital Markets: The “Q4 inflation report is the last key input to the RBA decision next week. Our economists are in line with consensus, expecting headline inflation steady at 1.7%y/y. A near 5% rise in fuel adds ~0.15ppt with further drought-driven increases in food prices and currency-induced lift in clothing and footwear likely. This is offset by a more muted increase in the housing component amid flat rents and a modest increase in utilities.

“We expect the key core measures to have stayed subdued in the quarter with stable but still far too low annual inflation at 1.4%y/y. Outcomes in line with consensus would both be below the RBA’s end 2019 forecasts. But after strong Dec employment data, the RBA call is still finely balanced and any upside surprise to inflation should benefit AUD more as a result.”

Overseas data: US trade balance, wholesale inventories, retail inventories and pending home sales all for December; Fed policy decision and post-decision news conference by Jerome Powell

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,859.67.

The projected upper bound is: 7,160.55.

The projected lower bound is: 6,840.30.

The projected closing price is: 7,000.42.


A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 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 32.6556. This is not an overbought or oversold reading. The last signal was a sell 2 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 56.08. 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 2 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 16. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.


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 down -96.000 at 6,994.500. Volume was 8% above average (neutral) and Bollinger Bands were 110% wider than normal.

Open     High      Low     Close     Volume___
7,051.2007,090.5006,964.7006,994.500 619,673,536
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 7,051.44 6,832.33 6,636.90
Volatility: 13 15 14
Volume: 531,479,296 546,387,520 610,745,920

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.


S&P/ASX 200 is currently 5.4% above its 200-period moving average and is in an upward 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 bullish on .AXJO and have had this outlook for the last 12 periods.

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.