Australia: S&P/ASX 200 (AXJO) slight dip ahead

Australia: S&P/ASX 200 (AXJO) slight dip ahead

Australia: S&P/ASX 200 (AXJO) slight dip ahead

A shock Wentworth byelection result looms over the Australian share market at the start of a new trading week, while a soft lead-in from Wall Street is also expected to knock the local bourse lower at the open.

The SPI200 futures contract was down 12 points, or 0.2 per cent, to 5,911.0 at 0800 AEDT on Monday, pointing to a slight dip ahead for the ASX, which had edged lower on Friday but still managed to finish a volatile week in the green.

The local financial sector closed higher for the fourth straight session on Friday, but materials sunk to make it eight of the past 10 trading days in the red.

The Coalition’s loss in Wentworth to Independent Dr Kerryn Phelps – a result set to create a federal minority government – is also tipped to cause market uncertainty on Monday.

Meanwhile, the US benchmark S&P 500 stock index edged lower at the close of overseas trade, with strong earnings from Procter & Gamble Co offset by ongoing concerns about rising interest rates and tensions over trade policy denting economic growth.

For the week, the S&P gained 0.02 per cent, while the Dow rose 0.4 per cent and the Nasdaq fell 0.6 per cent.

Copper rose and nickel prices rebounded on Friday, while gold edged higher for the third straight week in the wake of a recent sell-off in global stocks.

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 6,086.52.

The projected upper bound is: 6,054.26.

The projected lower bound is: 5,811.19.

The projected closing price is: 5,932.72.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 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 (which appears to be the case with S&P/ASX 200) 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 it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend (which appears to be the case with S&P/ASX 200) 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.

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 79.1013. This is not an overbought or oversold reading. The last signal was a buy 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 36.52. 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 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 -54. This is not a topping or bottoming area. The last signal was a buy 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 sell 9 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -2.900 at 5,939.500. Volume was 7% below average (neutral) and Bollinger Bands were 148% wider than normal.

Open High Low Close Volume___
5,942.4005,942.4005,883.3005,939.500 534,227,168

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 5,949.87 6,172.44 6,075.00
Volatility: 21 13 12
Volume: 614,851,392 609,932,800 572,705,024

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 2.2% below its 200-period moving average and is in an downward 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 bearish on .AXJO and have had this outlook for the last 31 periods.

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