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MARKET OUTLOOK - Global & Local


mminion

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It’s been a soggy two-months for the ASX200. After what was a sharp-recovery out of bear-market territory between March and June, the index has broadly traded sideways, as market participants tackle a soft macroeconomic backdrop, and growing concerns about the COVID-19 pandemic.

 

After initial success in suppressing the coronavirus, recent outbreaks in Victoria, and fears of potential outbreaks in other states, has cast doubt over Australia’s economic recovery, and the earnings outlook for ASX-listed companies.

 

The dynamic has set-up a high-impact, and highly uncertain reporting period for the ASX. A dive in earnings growth is tipped, with current estimates suggesting a contraction in EPS for the financial year in the realms of 15-20 per cent, which will be coupled with a marked reduction in dividends

 

On top of that, the future isn’t necessarily looking particularly clear, either. Corporates have provided little guidance up to this point about future earnings, with the lack of clarity feeding into what remains an underwhelming outlook for corporate profits.

 

Such low expectations for this reporting period, along with heightening uncertainty about the future, is keeping the buyers to the sidelines, as market participants await stronger and more definitive signals about market fundamentals.

 

As a result, technically speaking, the ASX200 looks to be in consolidation mode. The RSI is neutral with a reading only just above 50. The MACD is revealing momentum is neither skewed to the upside nor downside. And the 20, 50 and 200-day EMA’s are converging, with price only marginally above all three averages.

 

Given this backdrop, the logic of trading the ASX200 in this earnings season is simple: better earnings and sharper forward guidance ought to stoke upside in the index, while the opposite ought to weigh the risks to the downside.

 

The top and the bottom of the ASX200’s recent range become the most-significant levels to watch this reporting period. The top of the range and price-resistance sits at around 6220 currently, while the bottom of the range sits at around 5630.

 

A break above or below would send a clear signal about the market’s directional bias. A topside break would open-up potentially significant upside, with the next level of resistance to be found around 6530. A downside break would open-up a sell-off towards the 5500-level.

 

Overall, with price consolidating, and the index remaining in a broader uptrend, the risks for the ASX200 look to be skewed slightly to the upside. However, downside risks ought to be carefully considered and managed, given the particular uncertainty surrounding this earnings season.

 

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DYOR as always.

 

 

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  • 2 weeks later...

https://www.afr.com/markets/equity-markets/...20200819-p55n22

 

A successful vaccine and the subsequent return to regular life could quickly shift policymakers’ attitudes towards the extraordinary economic stimulus they’ve poured on. If they decide to taper back those efforts quickly, the market’s celebration could be brief.

 

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i kinda lean towards this outcome!! but not sure what those CBs will do though!! :unsure:

 

 

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US elections are early November. Here we are late August. October is usually a good month for market carnage. So are the other eleven I believe. But before the US elections are only two.

 

Something big coming to set off a catastrophe or fireworks to hook the voters in is my best guess. And there is really only about ten weeks to do it in. A bit less really because time is of the essence.

 

Things are getting exciting.

 

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Given talk of global food shortages appearing in the media at times, i thought i'd take a look at some of the commodity markets.

While Corn, Wheat, Soybean, Coffee, Sugar are probaly not the best way to look at this, you would expect to see any coming shortages to be represented in some prices.

However these markets do not seem to be reflect any of the fears in the mainstream media. The attached charts are continuous contracts, if you take a look at future contracts 1 year to 18 months out, theres no real difference.

 

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post-6542-1598062316_thumb.png

post-6542-1598062326_thumb.png

 

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https://www.cnbc.com/2020/08/24/2020-electi...t-forecast.html

 

CNBC quizzed the 20 market-watchers about where they expect 2020 to end for the S&P 500. The index finished last Friday at a record 3397.16.

 

Eight analysts cited a range of 3400-3600 as their December 2020 target for the index. Five called for a range of 3000-3200, which would mark a decline of between roughly 6-12% from current levels. Valuations and uncertainty around the coronavirus pandemic were reasons cited for that negative outlook.

 

Three strategists picked the S&P 500 finishing above 3600. Two said it would come in below 3000.

 

 

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can't see much of up side from SPX current level!! :unsure:

but on TA term the index is really bullish!!

 

 

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1

After spending the prior four days knocking on the door of 3,400, the SPX finally closed above the mark today. The index now is 2% away from achieving our next upside target of 3,500, which has been in place since 7/20.

 

2

The index advanced for the 13th time in the last 17 trading sessions. With five trading days left in August, the SPX logged just its second 1% advance of the month (8/12). The last 1% LOSS occurred on 7/23, a streak of 22 days. That's by far the longest of 2020 and the most since 74 straight (10/9/19 - 01/24/20).

 

3

The continued lift now has put the SPX's 14-Day RSI above 70 for the first time since 6/9. We'll recall that a two day Fed meeting concluded on 6/10, followed by that huge 5.9% decline on 6/11. So, while that kind of catalyst isn't present now, the SPX has yet to prove it can do much in 2020 in the short-term while sporting an overbought momentum reading.

 

4

Overall, 10/11 Sector ETFs advanced on Monday, with six finishing higher by at least 1%. The XLK was NOT among the leaders, but it was able to finish near its mid-point after dropping 1.5% during a morning sell off. Regardless, it still made a fresh new high today.

 

5

The XLE Energy ETF led all day, as it attempts to bounce back from an ugly week once again. As noted yesterday and again this morning, it has done this three times prior since July. XLE has proven it can respond well to o/s conditions, but it has yet to follow through much beyond the 38 zone.

 

6

The Healthcare XLV ETF lagged all session and despite coming back from its lows, it failed to poke back above the break-even mark. The XLV continues to trade within the same five-week, four-point trading range.

 

7

The longest winning streak of the ETFs we track belongs to SOCL (Social Media), which is up six straight days. It now has five winning streaks of least six days since the March lows, the longest being nine in a row (6/29 - 7/10).

 

8

The JETS Airlines ETF was up a big 5.6%. Its last three 5% gains were followed by losses the next day (7/15, 6/29 & 6/12).

 

9

The +1,481 opening NYSE TICK was the first reading > +1,000 since 8/12. That ended a seven-day streak, the longest since 10 in a row (12/17 - 12/31/19).

 

10

Composite Volume was below 10 billion shares for the ninth straight day today, by far the longest since before the crash. The last 10 billion share day was 8/12.

 

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the study target SPX to 3500.

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https://www.afr.com/world/asia/the-risk-of-...20200826-p55pbq

 

Both sides have pledged to keep at a safe distance during these encounters. Yet what is a safe distance exactly?

 

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it is the thingy that got me thinking --market is due for big pull back.

but most of major market keeps rallying up and up.............. lucky that i still have some skills for TA term that gives me some edge to avoid big loss by trading.

 

hope you guys give some your thoughts about this market, for us to discuss it here!! :P

 

 

 

 

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The Fed announcement is a big one; basically inflation of 2% is no longer a target

The S&P 500 ticked further into record territory on Thursday after the Federal Reserve made a major overhaul to its strategy, one that could keep interest rates low for longer.

 

The benchmark index rose 0.2%, to another all-time high, but it veered through a jumbled day of trading to get there. Prices for stocks, bonds and gold all made several U turns after Fed Chair Jerome Powell gave a highly anticipated speech. In it, he essentially said the Fed may continue efforts to prop up the economy even if inflation rises above its target level of 2%, as long as it had been weak before then.

 

The change in the Fed's strategy is a huge deal for markets. The central bank has been the superhero repeatedly rescuing them from crises through the years, by slashing short-term interest rates and buying all kinds of bonds. The momentous announcement was widely expected on Wall Street, if not on Thursday then later this year, but trading was nevertheless erratic following it......

 

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