Strong US lead to see Australia: S&P/ASX 200 (.AXJO) open high today
The interest today will turn to local retail sales data today, as traders prepare for tomorrow’s RBA meeting. And on a global front, though it’s unlikely to be anywhere near as significant as last week, traders will be positioning for another busy week in the week ahead.
2. Bullishness reigns in US stock market: Having swung-about amidst a very data-dense week last week, the US stock market ended with a bang on Friday night. The benchmark S&P500 closed just below 1 per cent higher, in what was a high activity day on Wall Street.
Strong US jobs data, and a sprinkling of trade-war optimism can be thanked for the move, which, from a technical perspective, sent the S&P500 above a multi-year trendline resistance level around 3060. It adds to what’s been a better-than-expected reporting season for US stocks, with the forecast contraction in earnings growth narrowing to -1.1% for Q3, and 76 per cent of companies beating estimates.
3. Swinging trade-war sentiment turns positive: Now of course, any move that’s trade-war related may well prove fleeting. One need only to look at last week how speculation about US-China trade-talks can move markets. Nevertheless, on the surface, hope has bloomed anew amongst traders, after China stated its achieved “consensus in principle” with the US on the “phase-1” trade deal between the countries.
That message came following a phone call held between US and Chinese negotiators, aimed at securing a new date to sign a trade agreement. No such data has been announced, so market participants will likely remain sensitive to trade-headlines until this confirmation occurs.
4. US jobs data eases fears of US economic slowdown: There was also a keen focus on fundamentals on Friday. A batch of high impact US economic data was released, with US Non-Farm Payrolls and US ISM Manufacturing PMI data the chief concerns. The latter disappointed, missing expectations, though printing more strongly than last month.
But the real focus was on the US jobs numbers, and it surprised to the upside. 128,000 jobs were added to the US economy in September, clearly above the 90,000 estimated leading into the release. Indeed, the rate of jobs growth in the US is slowing down. However, it’s not so severe yet to incite fears of a looming US recession.
5. Strong US lead to see ASX open high today: The notion that deteriorating US business conditions isn’t weighing too heavily on its labour market, and that the all-important US consumer remains in a solid-enough space, was what really underpinned Friday’s record-breaking rally. And that’s setting up the ASX200 for a strong start to this morning’s trade, with SPI Futures suggesting that the benchmark index ought to open 25 points higher.
Investors will be hoping this jump out of the gates will herald a more bullish week’s trade for the local stock market. The ASX200 appeared to consolidate last week, judging by its price action, shedding 1 per cent, even in light of the grind higher in global stock indices.
6. US Retail Sales data prefaces tomorrow’s RBA meeting: Attention turns today to the release of Australian Retail Sales data, as traders look to get a final gauge on domestic economic health before tomorrow’s RBA Meeting. Retail activity is expected to have expanded 0.4 per cent last month, with the data being analysed through the lens of whether the numerous stimulus measures thrown at households by policymakers in 2019 is beginning to show-up in consumer behaviour.
Whatever the result, today’s data won’t shift the dial for the market’s views on tomorrow’s RBA meeting. Traders are ascribing a less than 5 per cent chance that the RBA will cut rates this month.
7. A few things to watch in the week ahead: Last week will be tough to match in terms of high-impact, market-moving news. However, a few events do jump out from the economic calendar that are worth noting. Globally, there’ll be a bit of interest in the UK economy, as the countries election campaign kicks-off, and as the Bank of England meet to decide rates.
Data-wise, US Non-Manufacturing PMI is released, New Zealand and Canada release their jobs numbers, while the EU updates its economic projections. Locally, it will be mostly about the RBA. But earnings season also rolls on, while a degree of interest will be in the release of the RBA’s quarterly Monetary Policy Statement.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 6,627.87.
The projected upper bound is: 6,804.01.
The projected lower bound is: 6,540.03.
The projected closing price is: 6,672.02.
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 33 white candles and 17 black candles for a net of 16 white candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 21.1965. This is not an overbought or oversold reading. The last signal was a sell 2 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 50.30. 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 84 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 -61. This is not a topping or bottoming area. The last signal was a sell 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 0 period(s) ago.
Rex Takasugi – TD Profile
S&P/ASX 200 closed up 5.700 at 6,669.100. Volume was 13% below average (neutral) and Bollinger Bands were 21% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 6,693.87 6,641.16 6,432.09
Volatility: 7 13 13
Volume: 568,551,104 645,250,816 640,072,256
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.
S&P/ASX 200 is currently 3.7% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 4 periods.
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