S&P/ASX 200 (.AXJO) Set to Open Lower

S&P/ASX 200 (.AXJO) Set to Open Lower

S&P/ASX 200 (.AXJO) Set to Open Lower

The ASX gained 0.5 per cent over the week, but its days of out-performance are a distant memory now.

Risk is back in town, but can it last? To put it subtly, things are evenly balanced.

It is odd, but not unprecedented, both US equities and bond yields are rising.

Usually higher bond yields (or falling bond prices) are bad for equities. To get the same yield from equities, prices would need to fall too. That’s not happening.

Usually higher US bond yields would drag in money from offshore and drive up the US dollar. That didn’t happen last week either, consequently the Australian dollar rose 1.5 per cent over the week and is back nudging 73 US cents.

Maybe the old model is broken. Maybe there never was a true correlation. Maybe higher bond yields can co-exist with higher share prices and as they sang in the Lego Movie, “Everything is awesome”.

After all, rising yields also indicate growing optimism in the future and a greater appetite for risk.

If things follow last week’s trend and the US economy keeps getting stronger, unemployment continues to fall while trade tensions ease, it is quite possible bond yields and the stock market continue to rise for some time.

Should the Fed keep on its current path of tightening, while a trade war puts the brakes on the US economy, things are likely to revert to the old model — that means rising interest rates and a falling stock market.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 6,286.80.

The projected lower bound is: 6,099.45.

The projected closing price is: 6,193.12.

Candlesticks

A white body occurred (because prices closed higher 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 22 white candles and 28 black candles for a net of 6 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 75.5921. This is not an overbought or oversold reading. 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 46.86. 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 sell 64 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 25. This is not a topping or bottoming area. 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 buy 0 period(s) ago.

Rex Takasugi – TD Profile

S&P/ASX 200 closed up 25.100 at 6,194.600. Volume was 80% above average (neutral) and Bollinger Bands were 54% wider than normal.

Open High Low Close Volume___
6,169.5006,209.6006,169.5006,194.6001,035,943,040

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 6,169.19 6,251.38 6,072.86
Volatility: 9 10 11
Volume: 635,265,088 583,280,448 566,554,880

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 2.0% above 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 11 periods.

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