Australia: S&P/ASX 200 (.AXJO) volatility has been a key market theme

Australia: S&P/ASX 200 (.AXJO) volatility has been a key market theme

Australia: S&P/ASX 200 (.AXJO) volatility has been a key market theme

The return of volatility has been a key market theme this year and appears likely to intensify, at least in the short term, from Wall Street to the ASX, which is set to open weaker on Monday.

The Dow Jones Industrial Average swung wildly on Friday before closing down near 300 points, retesting investors’ tolerance for risk.

“So much for the typical October strength in equities – a month in which the major US indices historically have gained ground 75 per cent of the time,” Tematica Research chief macro strategist Lenore Hawkins said. “We’ve seen major index support levels broken while earnings beats have been smaller than we’ve seen over the past year with revenue and forward guidance giving investors jitters.”

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 6,039.79.

The projected upper bound is: 5,788.38.

The projected lower bound is: 5,515.06.

The projected closing price is: 5,651.72.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 7.0053. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 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 21.45. 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 buy 7 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 -197.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 14 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 1.100 at 5,665.200. Volume was 47% above average (neutral) and Bollinger Bands were 173% wider than normal.

Open High Low Close Volume___
5,664.1005,700.2005,624.6005,665.200 849,827,392

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

Moving Averages: 10-period 50-period 200-period
Close: 5,843.43 6,119.60 6,067.03
Volatility: 20 15 12
Volume: 630,700,480 621,745,600 578,348,864

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 6.6% 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 moderate flows of volume out of .AXJO (mildly bearish). Our trend forecasting oscillators are currently bearish on .AXJO and have had this outlook for the last 36 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

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