The Australian Sharemarket lost over $40 billion in value in trading today after lower than expected earnings from the banking and consumer staples sectors. The past three months has seen the All Ords Index trading in a sideways pattern between resistance of 5,960 points and support of around 5,740. The index attempted to breakout from the psychological 6000 level on four occasions without success.
Today’s trading saw a very bearish candle which closed below the support level of 5,720. The bears are in control and continued selling in the short term is likely to push the index further down towards the next support of 5,670 based on August/September resistance. A drop below this level does not see support till 5,520.
All Ords Index : Retraced last week and challenged the 5,700 support level. Prices are now trading under the 20 day moving average which has turned slightly downwards. A further pullback to the 5,700 is possible before we see a resumption of the up-trend. The index is still trading well above the longer term 50 day moving average.
Domino Pizza (DMP) : looking for a breakout from the upper trend-line.
M2 Group (MTU) : resistance breakout and new high, well supported by the 20 day moving average.
Mantra Group (MTR) : Ascending triangle resistance breakout for a strong technical pattern long trade possibility.
The Australian sharemarket has enjoyed strong gains over the past four weeks and traders will be trying to determine when the correction is likely to come. Looking at the chart for the All Ords Index below I think we can see signs of this correction likely to take place soon. The index is continuing to push higher and last weeks trade saw this continue up-wards. I have drawn the short term up-trend line which in technical terms is looking to form a bearish flag. This is where the parallel trendlines are pointing upwards as shown. I think a correction this week is possible and may push he index back towards support at 5,800 points.
Below are shares on the Australian share market which have interesting technical charts.
Ansell (ANN) : Symmetrical triangle breakout
Capitol Health (CAJ) : Symmetrical triangle , looking for a breakout
Medusa Mining (MML) : Ascending triangle breakout
Slater & Gordon (SGH) : Bullish flag, look for a breakout to confirm continuation of up-trend
strong gains over the past six trading sessions sees it coming in close proximity to resistance. The buying has been on low relative volume so the rally may pause at 5520 points before market direction is re-established.
breaking out from the bullish pennant.
Ramsay Health Care (RHC)
any weakness should find support at the resistance breakout level of $56.30.
TFS Corp (TFC)
bottom consolidation forming an inverse head and shoulder. Looking for a breakout over $1.55
The Australian sharemarket has rallied over the past two days but the short term trend is still bearish. The 20 and 50 day moving averages are trending down with the price trading well below the averages. I see resistance being met at 5350 points which is the horizontal support level of April to June which should turn from support to resistance. Last weeks rally was held up by the 20 and 50 day moving averages and it is likely that this will happen again.
Sirtex Medical (SRX)
Despite the bearish chart of the All Ords index above there are still shares in the top 300 stocks that are showing bullish technical charts. Sirtex Medical is in a very strong up-trend. A recent trading range formed with a bullish breakout candle today on above average volume. I will be looking for a slight pullback to the resistance price of $27.50 to enter with my stops placed under $27.00.
Australian shares have fallen for the third day in a row. The technical’s show that the index fell straight through the support level of 5420 and closed at it’s low today of 5352. This level was the support low seen in April to June. If the price falls through this price level then it is likely to signal further weakness and the index could then begin to fall all the way down to the low’s seen in mid October.
In contrast the US markets are continuing it’s bullish run with the S&P500 index making a new high overnight. It is clear that the Australian market is trading independently of the larger US market and is failing to follow it’s lead. This may signal that investors and traders are bearish about Australian market conditions and see better value in other markets. A pull back in the S&P500 index is likely to be supported at the resistance level of 2020 points.
I am neutral at present and not entering any long trades on the Australian market until I see evidence of the support level at 5350 holding and retracing above 5420.
The Australian Sharemarket lost ground last week and retraced slightly. From a technical perspective the index reversed at the resistance level of 5520 which was established from the peaks of April May and June as seen on the chart below. The current support level sits at 5420 which was formed by the pivot low seen in August. If the index falls through this price level then we could see the index price falling all the way back down towards the support level of 5360 which formed the base of the trading range seen from April to July. Clearly for the index to push higher it will need to break through the resistance level of 5520.
CORPORATE TRAVEL MANAGEMENT LIMITED (CTD)
The chart shows a nice up-trend in the share price with a breakout from the pennant formation on Friday. Volume was good which indicates the breakout has momentum. Short term traders could look to enter on Monday within the boundary of Friday’s breakout candle with stops under $9.50.
Overseas markets ended the previous week on a high with both the Dow Jones Index and the S&P500 index closing at all time highs on Friday. This was achieved on the back of the surprise announcement from the Bank of Japan to increase its stimulus program which includes an increase in its purchasing of Japanese Government Bonds and exchange traded funds.
The other stimulus to the US markets has been the better than expected third quarter earnings report. So far 70% of stocks have reported their 3rd quarter earnings and more than three-quarters of these companies have reported above analysts estimates.
The major indexes have now rallied from the September and October correction and have pushed to all time closing highs. I for one was expecting the resistance levels to hold in the short-term but bullish momentum has easily pushed beyond these technical levels.
The chart for the All Ords Index does not provide as bullish a picture as that of it’s US counterparts. Clearly further bullish movement on the US markets will continue to push the Australian markets higher but the All Ords Index is likely to meet resistance at 5670 points as shown on the chart below and it would not surprise to see a reversal at this price level.
One stock from the Australian market to look out for is that of NEXTDC (NXT) as charted below.
The stock was in a strong downtrend over the past 12 months with a breakout from the downtrend in late October with the subsequent appearance of a higher high and higher low to signal the start of an early up trend. The 20 and 50 day moving averages have also formed a bullish cross. I will have this on my watch list and will look to any retracement as being a potential to enter on the long side.
Wednesday July 23rd and the Australian share market had a positive day with the broader All Ordinaries Market Index reaching at a six-year closing high. The index closed up 0.8% at 5567 points after reaching an intraday high of 5587 points, this was on the back of positive movements on Wall Street markets overnight.
The All Ords index has been struck in a trading range over the past few months as previously mentioned in my last blog. Today’s price action has provided a positive bullish signal that further rises may be following, but attention will turn back towards the US markets over the next few weeks which is in the midst of its profit reporting season. If US company reports are positive then this will continue to push the Dow Jones Index up which will then follow through onto the Australian share market.
With today’s resistance breakout technical traders like myself will be hoping that the resistance level of 5540 will now hold as short-term support on any pullback.
Macquarie Group (MQG)
Macquarie Group Limited provides banking, financial, advisory, investment, and fund management services. The share price chart below bears a similar resemblance to the one above with the price stuck between a trading range over the past three months. As did the All Ords index the share price for Macquarie was able to break through the range resistance level of $61.00 today. The price is currently trending upwards in an orderly fashion and today’s breakout indicates that the next leg up is underway.
The Australian sharemarket has been able to rally over the past fortnight with the All Ordinaries Index rising 0.8% last week and within touching distance of it’s resistance level. The chart below demonstrates the sideways movement of the index over the past three months with prices supported at 5,350 points with overhead resistance in the region of 5,540 points. On Thursday prices attempted to breakout above the resistance level but were pushed lower towards the close with the formation of a long tailed reversal candle.
The overall picture indicates that bulls are trying to push the markets higher but have been met with selling pressure at current levels. In order for the All Ords to push higher prices will need to breakout and close above the resistance level of 5,550 points. Any further declines from current levels are likely to be halted by the support price of 5,350.
Lonestar Resources (LNR)
Lonestar Resources, Ltd. is a leading independent oil and gas company involved in exploration, production, and acquisition of unconventional oil and gas reserves.
The share price has been in a strong up-trend for most of 2014. Friday saw a bullish candlestick rising through resistance on strong volume. There could be further up-side left in this share but volatility is high and traders do need to be careful after such a strong run up that prices could be extended. In situations such as this I make sure I have a tight stop loss in the event that prices turn downwards quickly. I will wait for the opening of the markets on Monday to see if prices can open above the previous high of $0.51. If this occurs then a limit buy order in this area can be covered with a stop loss under Friday’s low of $0.48.