Australia: S&P/ASX 200 (.AXJO) Trade war truce

Australia: S&P/ASX 200 (.AXJO) Trade war truce

Australia: S&P/ASX 200 (.AXJO) Trade war truce

It’s been coming for some time, but Donald Trump finally managed to sign a trade war ceasefire with China. It will see tariffs reduced on some Chinese products by the US and China has committed to buying billions of dollars of various products such as agriculture and resources, China will also make it a little easier for US businesses to protect their IP.

This was seen as good news for businesses exposed to global trade such as BHP Group Ltd (ASX: BHP) and WiseTech Global Ltd (ASX: WTC) which rose on the announcement.

Rio Tinto Limited (ASX: RIO)

This week Rio Tinto announced its fourth quarter production results. Production was down 3% compared to the prior corresponding period (PCP) and down 4% compared to the third quarter of 2019. Copper production was down 9% on the PCP and aluminium was down 4% on the PCP, but bauxite was up 28%.

The total iron production for 2019 was down 3% compared to 2018. However, the averaged realised price for its iron ore was up 37% compared to 2018, so that more than made up for the slightly lower production numbers. Aluminium prices were down 14% and copper prices were down 7%.  

Pilbara Minerals Ltd (ASX: PLS) 

It has been a strong week for one of the ASX’s biggest lithium miners. The Pilbara Minerals share price went up 11.8% with investors thinking that the lithium price could rise after some Tesla related news.

Apparently Glencore is negotiating a long-term contract to ship cobalt to the new Tesla factory in Shanghai. More cars should mean a higher demand for lithium. 

Resolute Mining Limited (ASX: RSG) 

The big gold miner announced this week that it had achieved a sale of its Ravenswood Gold Mine for total proceeds of up to $300 million.

It will be taken over by EMR Capital and Golden Energy and Resources. The immediate sale price is $100 million with up to $200 million in contingencies depending on the future gold price and investment outcomes of Ravenswood.

Technical Indicators

Overall, the bias in prices is: Upwards.

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

By the way, prices are vulnerable to a correction towards 6,785.91.

The projected upper bound is: 7,228.44.

The projected lower bound is: 6,914.44.

The projected closing price is: 7,071.44.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 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 95.3085. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 9 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 70.89. This is where it usually tops. 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 136 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 137.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 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 buy 6 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 22.300 at 7,064.100. Volume was 15% below average (neutral) and Bollinger Bands were 63% wider than normal.

Open     High      Low     Close     Volume___
7,041.8007,088.1007,041.8007,064.100 500,321,056
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 6,914.95 6,789.99 6,611.04
Volatility: 9 15 14
Volume: 503,566,944 557,917,248 610,666,240

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 6.9% above its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on .AXJO and have had this outlook for the last 6 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an overbought condition.

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