Australia: S&P/ASX 200 (.AXJO) soars to record closing high as more RBA easing eyed

Australia: S&P/ASX 200 (.AXJO) soars to record closing high as more RBA easing eyed

Australia: S&P/ASX 200 (.AXJO) soars to record closing high as more RBA easing eyed

Australian shares surged to a record closing high on Wednesday, supported by growing speculation the Reserve Bank of Australia will cut official interest rates and launch quantitative easing (QE) next year.

The benchmark S&P/ASX 200 jumped 63.1 points, or 0.9 per cent, to a record closing high of 6850.6, less than 0.4 per cent below the record intraday high set in late July. The broader All Ordinaries rose 60.8 points, or 0.88 per cent, to 6,950.6 points.

Following a speech from RBA governor Philip Lowe on Tuesday evening that outlined what could prompt the bank to implement unconventional monetary policy measures to support economic growth, lower unemployment and push underlying inflation higher, the benchmark rose in early trade and kept on going, finding additional support as Westpac Bank became the first of Australia’s big four banks to forecast the RBA will introduce QE next year.

“Westpac now expects two rate cuts next year from the RBA, with the cash rate cut to 0.25 per cent in June 2020,” Westpac chief economist Bill Evans told clients. “Quantitative easing is also expected to begin in the second half of 2020.”

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 6,655.24.

The projected upper bound is: 6,994.21.

The projected lower bound is: 6,713.75.

The projected closing price is: 6,853.98.

Candlesticks

A white body occurred (because prices closed higher 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 32 white candles and 18 black candles for a net of 14 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 80.4783. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 61.68. 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 102 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 179.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 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 0 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 63.100 at 6,850.600. Volume was 4% below average (neutral) and Bollinger Bands were 29% narrower than normal.

Open     High      Low     Close     Volume___
6,787.5006,852.1006,787.5006,850.600 618,470,528
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,758.44 6,691.94 6,502.59
Volatility: 14 13 13
Volume: 632,759,232 609,161,280 638,894,976

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 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 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 22 periods.

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