Australia: S&P/ASX 200 (.AXJO) Australia Optimistic

Australia: S&P/ASX 200 (.AXJO) Australia Optimistic

Australia: S&P/ASX 200 (.AXJO) Australia Optimistic

The last 24 hours has featured a sea of red ink right across global market over night and Australia hasn’t avoided the carnage with the S&P/ASX 200 (ASX:XJO) plunging 2.5% or 132 points to close at 5221 points today.

Shayne Heffernan Trade Idea

“The bright spot is that people are becoming more realistic about what the future holds.”

“The idea we would have a quick V-shaped recovery in the economy was way too optimistic.

“It’s a wake-up call for companies to be more cautious with their cash flow and make plans for an extended downturn.” “that being said Australia has suffered decades of weak Governments and the outlook long term looks dodgy, the AUD remains overvalued ” Shayne Heffernan PhD in Economics

Why This Matters

The S&P/ASX All Ordinaries Gold Index (ASX:XGD) surged 132 points to close at 7049 points with strong performances from low-cost producer Evolution Mining (ASX:EVN) and other large producers such as Regis Resources (ASX:RRL) and Northern Star Resources (ASX:NST).

These companies were all up between 4% and 5%.

At the other end of the spectrum, the IT sector was hard hit as the S&P/ASX 200 Information Technology Index (ASX:XIJ) fell nearly 5% or 59 points to close at 1157 points.

While the XJO ended the day at a level close to a point that proved to be a springboard for the index on April 8 as it surged about 160 points in a day, it is difficult to see that happening on Wednesday given the state of overseas markets which saw the Dow plunge more than 600 points.

Indeed, the ASX SPI200 is pointing to another fall of circa 2%, currently standing at 5092 point, implying a decline of 107 points.

Some important data will be released today in Australia which may well impact markets, including skilled vacancies and retail sales, providing a better feel for the unemployment situation, the health of the retail sector and consumer confidence.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 5,728.95.

The projected lower bound is: 4,614.67.

The projected closing price is: 5,171.81.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with S&P/ASX 200) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 11.8377. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 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 44.27. 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 18 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 -74. This is not a topping or bottoming area. The last signal was a sell 2 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 17 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -13.400 at 5,207.900. Volume was 40% below average (neutral) and Bollinger Bands were 12% narrower than normal.

Open        High        Low         Close        Volume
5,221.300   5,231.800   5,100.700   5,207.900    539,769,088
Technical Outlook
Short Term:          Oversold
Intermediate Term:   Bullish
Long Term:           Bearish
Moving Averages: 10-period       50-period       200-period
Close:           5,348.73        5,826.89        6,504.35
Volatility:      34              66              36
Volume:          995,752,000     1,178,651,776   749,999,104

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 19.9% below 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 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 6 periods.

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