Stock Charts Technical Analysis – Australian and US Stock Market Report 16 Apr 18

Australian and US Stock Market Report 16 Apr 18

Australian & US Stock Market Report  16-April-2018

Friday the 13th is accepted as a bad or unlucky day each time it occurs. Looking at the markets the Aussie made an up day but gave back half of the day’s gain whereas the US markets all formed outside days closing well below the opens and down near the lows indicating that they could be reversal days. This could be bad, if they are reversal days, and you are over-leveraged to the markets and don’t have protection already in place? This is a bad situation to be in on any day let alone, Friday the 13th.

Markets used to mainly move on the back of events like companies reporting, decisions from central banks or economic numbers being released however what we have recently seen is that markets are moving on the back of Twitter. More correctly on the back of mainly one man using Twitter and that one man is the US president Donald (The Donald) Trump. These tweets can come out at any time of the day or night and drive markets with less than 140 characters.  Half of the time most people would say this is just noise or a rant but it is frequently moving markets.

 

Australian Stock Market (XJO)

Australian Market (XJO) Monthly Chart – last 5829.1, Friday 13-Apr-18

australian stock market report 16 Apr 18

Important Points to Note from the Monthly, Weekly & Daily Charts:

  • The Monthly trend is currently Up. We have a higher bottom and higher top in place.
  • March formed a Down month (a month with a lower high and a lower low than the month before) closing well below the open and just above the low indicating buyers were strongly overpowered by sellers.
  • The Weekly trend is currently Down. We have a lower top and lower bottom in place.
  • Last week formed an Up week (a week with a higher high and a higher low than the week before) closing above the open and down a 1/3 from the high indicating sellers were beginning to get the upper hand.
  • The Daily trend is currently Up. We have a higher top and a higher bottom in place.
  • Friday formed an Up day (a day with a higher high and a higher low than the day before) closing above the open and halfway down from the high indicating buyers were overpowered by sellers at the end of the day.
  • The Triangle pattern target of 5724 was reached (5724.8) which brought in the most recent bottom. This bottom also just happens to be lower than the Feb bottom (5786.8) and indicates continued weakness. This bottom is the lowest point for the year, so far, down 425.2 points or 6.9% from the Jan 6150 top which is the highest point since the GFC Bear market. However this is still less than the all-time high of 6851.5 made back in November 2007.
  • Wednesday reached a high of 5864.0 which is just shy of the 200 DMA (Day Moving Average) 5871 and the Fibonacci 61.8% level of 5872 of the last larger move down from 21st March. There is also a downtrend line from the 12th March which was temporary broken at the open of Wednesday before reversing to close down near the low. We have gained, almost in a straight line, 139.2 points or 2.4% in just 6 trading days. These are some of the reasons to have expected resistance to be found around this level. Friday retested the downtrend line and closed back below it after hitting the 50% (5844) level reaching 5844.7 at the high. This could be setting up a lower top which would be confirmed with a break below 5815 which is a tentative uptrend line from the recent 5724 bottom. Below 5801.5 we confirm a downtrend on the daily chart.
  • On the weekly chart we can see that the price action from the January top has been corrective as we have lower tops and lower bottoms. We are currently bouncing off the last bottom which just happens to be spot on the bottom trend line of what is shaping up as a downward sloping Trend Channel. This is similar to the upward sloping Trend Channel the Aussie market is still inside since early 2016. We are very close to testing the bottom of this upward slopping Trend Channel and if we were to break below the bottom trend line (approx. 5717) it would be quite Bearish for the local market.  
  • On the monthly chart we have 3 tops (5996.9 - Mar15, 5956.5 - May17 & 6150.0 - Jan18) which could be a potential Triple Top reversal pattern which needs to break below 4706.7 before it is confirmed and in doing so would set up a target of 3379. Alternatively there are 2 bottoms (4632.2 – Jun13 & 4706.7 – Feb16) which could be a potential Double Bottom reversal pattern which needs to break above 5996.9 to be confirmed (which its done) setting up a target of 7324 which would be a new all-time high if reached.
  • Volume on the monthly has seen larger volumes on the 2 recent down months than what we have seen on either of the 4 previous up months including the large breakout out move back in Oct17. Volume on the weekly has been declining over the last 4 weeks as the move down starts to find some support. Volume on the daily has been on the light side for all of April, so far, and this encompasses the recent bounce and rally we have seen. Overall volume across these time frames would suggest the sellers have the upper hand.
  • The daily trend is Up, the weekly trend is Down and the monthly trend is Up.

 

US Stock Markets (S&P 500 & DJIA)

US Markets (S&P 500) Monthly Chart – last 2656.30, Friday 13-Apr-18

US stock market 16 apr 18 monthly chart

Important Points to Note from the Monthly, Weekly & Daily Charts:

  • The Monthly trend is currently Up. We have a higher top and a higher bottom in place.
  • March formed an Inside month (a month with a lower high and a higher low than the month before) closing below the open and up a ¼ from the low indicating the sellers were in control most of the month.
  • The Weekly trend is currently Undecided. We have a lower top and a higher bottom in place.
  • Last week formed an Up week (a week with a higher high and a higher low than the week before) closing above the open and down about a 1/3rd from the high indicating the buyers were beginning to lose grip.
  • The Daily trend is currently Up. We have a higher top and a higher bottom in place.
  • Friday formed an Outside day (a day with a higher high and a lower low than the day before) closing a ¼ up from the low and below the open indicating the sellers were in controlled most of the day.
  • On the weekly we have the first significant lower top since 2015. However when you look at this on the daily we can see it’s a lower Double Top reversal pattern which has been confirmed with a break below 2647 setting up a target of 2499 which is still in play. More recently we could be seeing the 3rd top in a potential Triple Top reversal setting up which needs to break below 2553 to be confirmed setting up a target of 2434. We already have a downward reversal on Friday and the 50% (2678) retracement level of the last larger range down acting as resistance. We reached a high of 2680 on Friday before reversing. This is the Bearish scenario.
  • The Bullish scenario is that we are testing the neckline of a potential Inverted Head and Shoulders (IH&S) reversal pattern which needs to break above 2680 to be confirmed setting up a target of 2793. If this was to be reached this would put it right back up where the larger Double Top is possibly forming a Triple Top? The Head of the IH&S could also be the second bottom of a larger Double Bottom reversal pattern which needs to break above 2802 to be confirmed setting up a target of 3060.
  • Since late March the S&P 500 has been moving inside a sideways trading range (yellow rectangle) and until it breaks outside of this the S&P 500 is sideways. We are right at the top of this range and we have come into a point where it will be make or break very shortly, so get ready to act quickly once it shows its hand.
  • Early levels to watch are above 2680 (just above the top of sideways trading range and the neckline of IH&S) and 2645 (breaking below uptrend line from the second bottom or the Head of the IH&S) this would confirm a top and the 3rd top in the potential Triple Top reversal however it would still be inside the sideways trading range which is why it’s an early level to take action on. 
  • Volume of the last 2 months has been the highest it’s been for over 6 years and this is the first monthly down volume since Oct16. Volume on the weekly has been on the higher side since the top compared to leading into it. Volume on the down weeks has also been higher. On the daily, volume has been on the decline for April with down days still showing higher volume then the other days. We have been working higher over April on declining volume which is a sign that this move up is a weak move. 
  •  The daily trend is Up, the weekly trend is Undecided and the monthly trend is Up.  

 

Share Market Technical Analysis

 

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About Shane Langham

+61 (7) 3338 3838 Email Profile

Shane has passionately followed the markets since the age of 16, and has been an adviser in the financial markets since the year 2000 having worked for a range of firms, including one of the world’s largest investment banks as well as smaller boutique broking firms. Shane is also a past Vice President of the Australian Technical Analysts Association (ATAA) Brisbane, a position he held for 6 years.

Shane is currently a Senior Private Wealth Adviser at Phillip Capital and can assist you with all of your stock market needs - whether you are looking to buy or sell shares, set up a portfolio, grow your SMSF, protect your portfolio, or trade the market. He specialises in technical analysis, risk management, and options trading and focuses predominantly on the Aussie markets.

Shane also writes two key market related technical analysis reports (including a free weekly Market Commentary Report), designed to give traders and investors the best chance possible to get the results they are after from the markets. To find out more about these reports please click here. http://www.phillipcapital.com.au/shane-langham

Shane lives on the sunny Gold Coast with his wife and two dogs. He loves chatting about the market with other like-minded people, so don’t be afraid to pick up the phone or send him an email.

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