Australia: S&P/ASX 200 (.AXJO) to rise on encouraging COVID-19 trend

Australia: S&P/ASX 200 (.AXJO) to rise on encouraging COVID-19 trend

Australia: S&P/ASX 200 (.AXJO) to rise on encouraging COVID-19 trend

The Australian sharemarket is tipped to continue its strong start to the week after global equities were encouraged by early signs the coronavirus death toll is slowing.

The SPI200 futures contract was up 124 points, or 2.35 per cent, at 5,397.0 points at 0800 AEST on Tuesday, suggesting local stocks will rise again at the start of trade.

Global markets jumped overnight as coronavirus-related deaths showed signs of slowing in certain major cities.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite added more than 7.0 per cent each after a decline in the daily death toll in New York, the US’ biggest coronavirus hot spot.

“Whether mere perception, or reality, signs that the virus’ spread could be peaking – that the “curve is flattening” – emboldened market participants to buy into the notion that the worst of the COVID-19 crisis is passing,” IG Markets analyst Kyle Rodda said in a note.

US officials had earlier braced the country for a dire week, with the death toll topping 10,000.

The S&P/ASX200 benchmark index finished Monday up 219.3 points, or 4.33 per cent, to 5,286.8, while the All Ordinaries index rose 216.7 points, or 4.24 per cent, to 5,323.6 points.

The rally snapped a two-day losing streak, with the ASX200 closing at its best level since March 17.

The Reserve Bank board will consider today whether its bond-buying program needs tweaking when it holds its first monetary policy meeting since unveiling a historic suite of stimulus measures to combat the impact of the coronavirus pandemic.

Westpac’s economists are among those who do not expect the RBA to touch the cash rate on Tuesday as board members have already signalled it will likely remain lower bound at 0.25 per cent “for some time”.

“As such, the focus of RBA meetings will be on how the board assesses its QE measures and whether they may require adjusting,” Westpac said in a note on Monday.

The Australian dollar was buying 60.83 US cents at 0800 AEST, up from 60.50 US cents at the close of markets on Monday.

Technical Indicators

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 5,763.89.

The projected lower bound is: 4,671.02.

The projected closing price is: 5,217.46.

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 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 57.5699. This is not an overbought or oversold reading. The last signal was a buy 10 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 45.72. 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 9 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 108.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 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 8 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed down -34.500 at 5,252.300. Volume was 30% above average (neutral) and Bollinger Bands were 32% wider than normal.

Open     High      Low     Close     Volume___
5,286.8005,423.1005,187.0005,252.3001,113,309,440
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 5,123.15 6,121.98 6,563.58
Volatility: 72 65 35
Volume: 1,176,824,192 1,118,185,216 732,694,208

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 20.0% below 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 29 periods.

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