Australia: S&P/ASX 200 (.AXJO) staggers out of red as Treasury Wine weighs on market

Australia: S&P/ASX 200 (.AXJO) staggers out of red as Treasury Wine weighs on market

Australia: S&P/ASX 200 (.AXJO) staggers out of red as Treasury Wine weighs on market

Michael Clarke’s surprise decision to resign as chief executive of Treasury Wine had a powerful impact on the broader Australian stock market on Monday as investors just barely pushed the benchmark index into positive territory.

The news from Treasury sparked a 12 per cent drop in the stock and subtracting nearly 6 points. That was easily the biggest single move on a day where the S&P/ASX 200 only popped up into positive territory during the final settlement to close 2.8 points higher at 6652.5, a gain of 0.04 per cent.

The information technology sector was the worst performer, falling 2.2 per cent. Logistics player WiseTech went into a trading halt for the second time in a week to give itself breathing space after a short-seller report alleging it has overstated earnings.

Shares fell 12.3 per cent on Monday before they were halted so the company could “respond to allegations contained in a research report and ensure that trading does not take place in an uninformed or false market”.

Trading volumes for the index were average for a Monday with nearly 500 million shares trading and the session ended with 106 companies higher and 14 unchanged. Trading was particularly heavy in Treasury Wines, which closed at $16.40 after 12.5 million shares traded hands, and in Afterpay Touch, which dropped 3.3 per cent to $28.66.

Afterpay brushed off concerns the Reserve Bank will examine merchant surcharges, telling the market it is “not currently subject to an RBA inquiry or review process” and what is being proposed is a “broad-based, periodic review of the payments industry.”

On the positive side, property giant Stockland reported a strong first quarter for the financial year. In a market update it said that despite an “elevated” number of customers failing to settle purchases there was still positive momentum in the Sydney and Melbourne markets.

And the materials sector performed slightly better than the rest of the market despite weak outlooks for oil and raw materials. In particular BHP enjoyed a better day lifting 0.55 per cent to $34.98.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 6,813.25.

The projected lower bound is: 6,494.24.

The projected closing price is: 6,653.74.

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 31 white candles and 19 black candles for a net of 12 white 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 49.3404. 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 51.50. 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 75 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 34. This is not a topping or bottoming area. The last signal was a buy 9 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 4 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 2.800 at 6,652.500. Volume was 23% below average (neutral) and Bollinger Bands were 6% narrower than normal.

Open     High      Low     Close     Volume___
6,649.7006,652.5006,612.4006,652.500 506,489,600
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,631.20 6,605.41 6,391.77
Volatility: 12 15 13
Volume: 573,914,688 668,758,016 635,802,688

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 4.1% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 10 periods.

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