Australia: S&P/ASX 200 (.AXJO) Target 5500

Australia: S&P/ASX 200 (.AXJO) Target 5500

Australia: S&P/ASX 200 (.AXJO) Target 5500

If you look at the ASX 200 monthly chart from a long-term perspective, then we are just hanging on to the long-term uptrend. A drop below the 5800 level and we are looking at further falls to the 5500 level before any sort of technical support would kick in. On the contrary the S&P 500 could come off a further 10% and still be in the long-term uptrend (see monthly chart) and still well above pre GFC highs.

Our politicians seem to have squandered the mining boom benefits in transforming our economy by placing policy initiatives into a sector (housing) that is unsustainable and effectively a Ponzi scheme. Further drops in asset values in this sector and we are in serious trouble. Could be more like two decades for our market to recover to pre-GFC highs.

Back to the technical side of things and if you look at our daily ASX 200 chart it has dropped below the 200-day moving average in a very significant way. This would suggest that this short term move into a down trend will persist into a medium term down trend. For it to be otherwise our market would have to climb back above 6200 to form a higher peak. This I cannot see in the near to medium term with a peak lower more likely indicating a medium term down trend.

The other issue is that the US market I believe has now reached its highs and I don’t think it will regain those levels again in the near to medium term. Not with rates going higher which will happen unless Trump can pressure the Fed to hold. At least he will have someone to blame as nothing would ever be his fault. Apparently, tariffs are not inflationary at all and tax cuts don’t add to your widening budget deficits which would reduce your credit rating and further increase rates. I suppose he is well experienced in bankrupting companies and now he is doing his best to bankrupt a nation.

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 6,102.87.

The projected upper bound is: 5,980.74.

The projected lower bound is: 5,743.70.

The projected closing price is: 5,862.22.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 18.2567. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 8 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 27.33. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 81 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 -122.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 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 6 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 32.800 at 5,869.900. Volume was 1% above average (neutral) and Bollinger Bands were 153% wider than normal.

Open High Low Close Volume___
5,837.1005,884.7005,837.1005,869.900 584,035,840

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

Moving Averages: 10-period 50-period 200-period
Close: 6,018.56 6,192.91 6,077.25
Volatility: 20 12 12
Volume: 610,160,064 607,353,984 569,956,224

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 3.4% 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 28 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

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