ASX may dip – Are the bulls waiting?

January 15, 2021 - 5 days ago
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U.S. stocks finished below the waterline after a choppy session on Thursday as market participants remained glued to their screens for any hint of new developments on the awaited the unveiling of a potentially big economic stimulus package.

At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average fell -68.95 points, or -0.22%, at 30,991.52.

Earlier in the session, the 30-stock average rose more than +150 points.

The broad-based Standard & Poor’s 500 Index slid -14.30 points, or -0.38%, to 3,795.54, while the rich-tech Nasdaq Composite tumbled -16.31 points, or -0.12%, to 13,112.64.

Shares of Facebook dropped -2.4%. Amazon, Netflix, Microsoft and Apple all declined by more than -1%, while Alphabet dipped -0.9%.

The ASX futures rose +7 point, or +0.1%, to 6,656, while our local currency, the Australian dollar is currently buying US$0.7776 (as of writing).

President-elect Joe Biden is expected on Thursday (USA time) to unveil a stimulus plan that will boost the recent $600 direct payments, an extension of increased unemployment insurance, and support for state and local governments.

Biden plans to detail his proposals less than a week before being inaugurated as president.

Biden has said the plan would be “in the trillions of dollars,” an injection he says the U.S. economy needs to combat the economic fallout from the pandemic.

News sources reported that the president-elect would propose a spending increase of roughly $2 trillion.

Other published reports put the price tag at $1.9 million and predicted that Biden would call for increasing direct payments to $2,000 from the $600 already hitting bank accounts, meaning stimulus checks of $1,400 would go out.

Wall Street got a boost earlier in the session as trial data published late Wednesday showed that Johnson & Johnson’s one-dose coronavirus vaccine is safe and generates a favourable immune response.

Viewing the technical standpoint, the Relative Strength Index (RSI) 3-day ‘lookback’ indicator has broken above the 50-midway point, which in terms supports a positive signal.

Meanwhile, the Moving Average Convergence Divergence (MACD) balances at the 0.00 axis.

A break above the axis 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.

Due to the (XJO) advance now turns the attention to the recently challenged highs near the 7-week high or the near-term cap (resistance) at 6,755-65. Reassess from there.

Support holds from 6,665-75, with a potential base located beneath at 6,580-90, which expects a bullish response if challenged.

Daily outlook on the benchmark S&P/ASX 200

It was another mixed session on the Australian share market on Thursday as financial, and health shares offset losses in materials and energy.

The index overcame a weak start and managed to rise for the second day, with the finishing bell on Thursday viewing the benchmark S&P/ASX 200 index closing higher by +28.74 points, or +0.43%, to 6,715.3.

The All Ordinaries closed higher by +28.8 points, or +0.41%, at 6,982.7.

The local market lost as much as -17 points earlier in the session, with Afterpay soaring +9.74%, to $121.00 and rival Zip Co rose +4.95%, to $5.72 in a buy now, pay later rally, while the big banks also helped the turnaround.

Wall Street also lacked any direction as political uncertainty continues to engulf Washington as Congress began President Donald Trump’s impeachment hearings.

Just over a year ago, the House of Representatives impeached Trump the first time without a single Republican vote.

This time around, in a historic vote, the House of Representatives on Wednesday made Donald Trump the first U.S. president ever to be impeached twice, formally charging him with inciting an insurrection just a week after a violent mob of his supporters stormed the Capitol.

It marked the first time in the 231-year history of the United States that a president has been impeached twice in his term.

The impeachment article, for “incitement of insurrection,” was adopted by the Democratic-controlled House, 232 to 197, after several hours of debate.

A group of 10 Republicans joined Democrats in voting to impeach Trump.

Trump will be tried in the Senate, which may not even convene until Jan. 19, one day before leaving office.

The Financial sector continued to keep the index above the waterline with Westpac Banking Corp leading the “Fab Four” (banks) higher by +2.09%, to $21.03, with Australia and New Zealand Banking Group adding +1.82%, to $24.60, National Australia Bank rose +1.28%, to $23.78, Commonwealth Bank gained +0.42%, to $86.33, and Macquarie Group added +0.98% and settled at $138.30.

Health stocks were also strong, even with biotech giant CSL finishing flat.

Biotechnology giant CSL slipped -0.01%, to $271.00, while ResMed gained +0.68%, to $28.09, Fisher & Paykel Healthcare rose +0.74%, to $30.00, while Cochlear gained +4.85%, to $189.46, Ramsay Health added +1.41%, to $59.54 and Mesoblast climbed +3.28%, to $2.44.

Pro Medicus was the market’s best performer on Thursday with a +15%, gain to $36.53 after it secured a $40 million deal with U.S. firm Intermountain to roll out its imaging platform at 24 hospitals an 200 clinics.

Our major local miners struggled to capture its bullish charm with Fortescue Metals Group leading the titans lower after falling -1.63% to $24.76, while Rio Tinto slipped -0.89%, to $119.66, BHP Group dipped -0.35%, to $46.06, South32 ended flat at $2.71, Mineral Resources gained +0.26%, to $39.02.

Gold resources struggled to advance with Newcrest Mining falling -1.04%, to $26.68, Northern Star Resources lost -1.68%, to $12.84, Westgold slipped -2.8%, to $2.43.

As for our oil and gas producers, Woodside lost -0.26%, to $26.61, Oil Search lost -0.9%, to $4.40, Origin Energy fell -0.19%, to $5.15, AGL Energy rallied +0.99%, to $12.19 and Santos slipped -0.13%, to $7.50.

Travel stocks rallied with Webjet advancing +2.28%, to $4.93 and Flight Centre rose +1.05%, to $15.33, Qantas ended flat at $4.80 and Regional Express slid -0.27%, to $1.875.

Abacus Property Group fell -4.48%, to $2.77 as it traded without its dividend.

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