ASX bulls lurk

January 12, 2021 - 2 weeks ago
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U.S. stocks fell for the first time in five sessions on Monday, as investors took some profits after last weeks’ records, while several political issues took centre stage.

On Tuesday, the House will vote to call on Vice President Mike Pence to oust Trump through the 25th Amendment; if that fails, the House will move ahead with impeachment proceedings.

Multiple Cabinet-level officials have quit since the riot, with President-elect Joe Biden set to be inaugurated on Jan. 20.

At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average slipped -89.28 points, or -0.29%, at 31,008.69, dragged down by a -2.3% drop in Apple’s stock.

The Standard & Poor’s 500 Index was trading -25.07 points, or -0.66% lower, to 3,799.61, while, the rich-tech Nasdaq Composite fell -165.54 points, or +1.25%, to 13,036.43 as Facebook, Amazon, Netflix, and Google-parent Alphabet all closed lower.

Shares of electric vehicle maker Tesla fell -7.8% for its first negative day in 12 on Monday.

The ASX futures slipped -1 point to 6,637, while our local currency, the Australian dollar is currently buying US$0.7706 (as of writing).

Wall Street had rallied last week as investors bet that Democrats’ win of Georgia runoff elections would bring a higher likelihood of a heftier fiscal stimulus package to boost the pandemic-savaged economy.

Meanwhile, Bitcoin plunges. After trading above $41,000 as recently as Sunday, leading cryptocurrency Bitcoin sold off sharply on Monday, crossing below $31,000 less than 36 hours later.

Viewing the technical standpoint, the Relative Strength Index (RSI) 3-day ‘lookback’ indicator is currently balancing above the 50-midway point, which in terms supports a weak positive signal, while the Moving Average Convergence Divergence (MACD) is potentially in a prime position to break through the 0.00 axis, which in terms would support a positive signal.

The Average Directional Movement Index (ADX) trend indicator is ranging.

Developed by J. Welles Wilder, the Relative Strength Index (RSI) is an extremely popular momentum indicator (oscillator) that measures the speed and change of price movements.

RSI oscillates between zero and 100.

According to Wilder, (depending on the period setting), the RSI is considered overbought when above 90 and oversold when below 10.

Signals can also be generated by looking for divergences, failure swings and centerline crossovers.

RSI can also be used to identify the general trend.

Gerald Appel developed the (MACD) technical indicator back in 1979, while in 1986, Thomas Aspray added the histogram.

The MACD is a tool used to identify moving averages that indicate a new trend, whether bullish or bearish.

(MACD) plots the distance between moving averages and helps traders identify trend direction and whether the bullish or bearish momentum in the price is strengthening or weakening.

Since last week’s rebound, the bulls are expected to stage another upside challenge.

A break of the MACD would give additional momentum to navigate towards the topside of the 7-week range, with the resistance viewed at 6,755-65, which is expected to draw a bearish response.

The minor support is located from 6,690, with a potential base forged from 6,580-90.

Daily outlook on the benchmark S&P/ASX 200

On Monday, the ASX 200 struggled to recapture its bullish charm after its recent two ‘bullish’ consecutive sessions; the market struggled to break over the 7-week cap at 6,755-65 after posting an intraday high of 6,761 before its retreat.

Gold and technology stocks weighed on the Australian share market after spot gold plummeted 89 dollars on Friday before rebounding off a 6-week low.

At the closing bell, the benchmark S&P/ASX 200 index fell -60.70 points or -0.90%, to 6,697.20, while the All Ordinaries declined -64.70 points, or -0.92% to settle at 6,959.50.

On Sunday, U.S. House Speaker Nancy Pelosi said, she would push ahead with efforts to remove President Donald Trump from office during his administration’s final days after his supporters’ violent attack on the Capitol.

Ms Pelosi said there would be a resolution in the House of Representatives on Monday calling for the cabinet to remove Mr Trump as unfit for office under the constitution’s 25th amendment.

If Vice President Mike Pence does not agree, “we will proceed with bringing impeachment legislation” to the floor of the House of Representatives, Ms Pelosi said.

“In protecting our Constitution and our Democracy, we will act with urgency, because this President represents an imminent threat to both,” she said.

Materials struggled throughout the day with our local minors weighing on the Index.

Rio Tinto led the titans lower after slipping -1.3%, to $122.40, BHP Group tumbled -0.36%, to $46.50 and Fortescue Metals Group slid -0.51%, to $25.21.

Lynas Rare Earths fell -1.96%, to $4.51, IGO retreated -2.07%, to $7.10, OZ Minerals added +0.05%, to $21.03 and Mineral Resources dropped -2.42%, to $39.50.

The Financial sector was mixed with the “Fab Four” (banks) directionless, with Westpac Banking Corp eking out +0.05%, to $20.29, National Australia Bank slid -0.6%, to $23.21, Commonwealth Bank lost -0.55%, to $85.16, Australia and New Zealand Banking Group added +0.04%, to $23.85, and Macquarie Group fell -0.67% and settled at $140.01.

As for our oil and gas producers, Woodside Petroleum advanced +2.62%, to $25.46, Santos firmed +3.15% to $7.20, Oil Search lost -0.94%, to $4.23, Origin Energy slid -0.2%, to $5.11 and Beach Energy rose +0.78%, to $1.93.

Buy now, pay later Afterpay fell -1.73%, to $113.99, WiseTech lost -2.56%, to $27.74, Computershare added +0.79%, to $14.08, and Xero dropped -4.68%, to $135.93.

Biotechnology giant CSL lost -1.53% to $275.95, while ResMed rose +3.28% to $28.32, Fisher & Paykel Healthcare declined -1.41%, to $30.15, while Cochlear lost -1.26% to $182.90 and Mesoblast surged +14.29%, to $2.56.

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