Australia: S&P/ASX 200 (.AXJO) volatility in shares continue

Australia: S&P/ASX 200 (.AXJO) volatility in shares continue

Australia: S&P/ASX 200 (.AXJO) volatility in shares continue

The volatility in shares continued on Thursday, with the local sharemarket reversing falls from the previous session to close markedly higher after a positive lead from overseas.

The S&P/ASX 200 Index ended the day 70.3 points, or 1.1 per cent, higher at 6395.7, leaving the benchmark 10.7 per cent below its February 20 high of 7162.5 points.

Uncertainty continues

The equities rally came in spite of another escalation in the coronavirus outbreak.

“Certainly the better showing of stocks has little to do with diminished concerns regarding the global economic impact of COVID-19,” said National Australian Bank’s head of foreign exchange strategy, Ray Attrill.

“Where the number of new cases being reported in various countries continues to rise sharply, albeit the latest – and prospective – monetary and fiscal policy response by governments and central banks worldwide is providing something of a salve for risk markets.”

California declared a state of emergency on Wednesday, while the last update from the World Health Organisation reported a sharp increase in cases in Europe’s largest economies.

New cases outside of China have risen by about 20 per cent a day. If that rate were to continue, there would be one million cases in total outside of China by the start of next month.

Goldman Sachs global economic strategist Bill Zu said the investment bank now sees a global recession as more likely but added that Australia may be in a position to narrowly avoid two quarters of negative growth.

Mr Zu said the domestic economy would receive a boost from Australians who have changed their plans to travel overseas because of the virus.

But the economy is still expected to be hit. Reserve Bank of Australia deputy governor Guy Debelle estimated the combined impact on tourism and education would shave 0.5 per cent off gross domestic product in the March quarter.

And with uncertainty about how far the virus will spread and its economic impact, local investors turned to a number of blue-chip stocks on Thursday.

CSL rose 3.5 per cent to end the day at $316.90, Macquarie Group rose 3.5 per cent to $137.53 and Wesfarmers rose 1.7 per cent to $40.39.

Travel and tourism companies were among those to fall on Thursday. Virgin Australia shares fell 4.6 per cent to 10.5¢, Flight Centre shares slid 5 per cent to $28.52 and Corporate Travel Management lost 7.5 per cent to end the day at $11.35.

TPG Telecom was one of the best performers, rising 9.6 per cent to $8.25 after the Australian Competition and Consumer Commission said it would not appeal the Federal Court’s decision permitting the company’s merger with Vodafone.

TPG also lifted its full-year earnings guidance by $35 million on the back of softer NBN headwinds.

Gold producer Newcrest Mining closed higher on a moderate day for the sector. Its shares rose 1.6 per cent to $28.54 after announcing it had finalised the sale of its Singapore business, which owns a 75 per cent stake in an Indonesian mine.

Technical Indicators

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 6,765.60.

The projected upper bound is: 6,582.66.

The projected lower bound is: 6,191.92.

The projected closing price is: 6,387.29.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white 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 27.7635. This is not an overbought or oversold reading. The last signal was a buy 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 26.51. 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 29 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 -92. This is not a topping or bottoming area. The last signal was a buy 0 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 8 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 70.300 at 6,395.700. Volume was 55% above average (neutral) and Bollinger Bands were 273% wider than normal.

Open     High      Low     Close     Volume___
6,325.4006,447.1006,325.4006,395.700 989,845,120
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 6,633.94 6,903.34 6,712.82
Volatility: 25 18 15
Volume: 1,100,792,576 654,247,104 645,101,824

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 4.7% 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 6 periods. Our momentum oscillator is currently indicating that .AXJO is currently in an oversold condition.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.