XAO – Will the All Ordinaries Index rebound this coming week?

It took three weeks for the All Ordinaries Index to rise steeply from the middle of a 4 month trading range to a high 5633.3, but only 1 week and one trading day to wipe of these gains. The fall Friday, August 9, was especially marked with the news of US bombing strikes against Iraq sparking the increased market jitters. From the Eureka Report

http://www.eurekareport.com.au/market-reports/2014/8/8/afternoon-stock-market-report

Nervous investors have pushed the Australian sharemarket sharply lower after US President Barack Obama authorised targeted strikes in northern Iraq.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index slipped 73.7 points, or 1.34%, to 5,435.3, while the broader All Ordinaries index retreated 71.1 points, or 1.29%, to 5,429.6.

CMC Markets analyst Michael McCarthy said the authorisation of air strikes appeared to be the trigger for the sell-off, although investors had already been treading cautiously and were also digesting the news that the Reserve Bank of Australia had cut its forecasts for growth and inflation.

“We’ve seen a pattern emerging in Australian stocks over the last 18 months. The market makes a new high — when it falls back through we see selling accelerating,” Mr McCarthy said.

“There’s a sentiment aspect as well because we’re ignoring good news. Rio Tinto put in an excellent report last night and [has been] down today.

“We’ve seen some strong trade data from China and that’s been shrugged off. Australian investors are nervous at the post-GFC highs.”

 

In Alan Kohler’s weekend report, Craig James of Commsec notes companies that will be announcing reports this week:

 

Australian profit-reporting season

The Australian profit-reporting season moves from second gear into third over the coming week.

On Monday, earnings are expected from JB Hi-Fi and Bendigo and Adelaide Bank. On Tuesday, Bradken is expected to report earnings with GPT Group.

On Wednesday, amongst those scheduled to issue their profit results are CSL, CBA, Computershare, Goodman Fielder, Primary Health Care, Carsales.com, Suncorp and OZ Minerals.

On Thursday, earnings are expected from Telstra, Fairfax Media, Dexus Property, Envestra, Goodman Group and SingTel.

And on Friday, Crown Resorts is expected to release its earnings result.

 

Chart Snapshot of the XAO

The week ended precisely at the last support level of 5430 (5429.6) following a 100% retracement.

The next support level if the market fails to rebound as expected in the coming week, is the trading range support level at 5353.

 

 

XAO falls back into a trading range

XAO falls back into a trading range

 

Upward primary trend intact.

Upward primary trend intact.

 

The momentum after the sharp falls this week is to the downside.

Investors would be advised to wait for the market to rebound before committing further funds.

However as the weekly chart of the Multiple Moving Averages shows, when there has been such a sharp fall over the past two years, the market has then rebounded strongly the following week or so.

Traders will no doubt be scanning the market carefully for bargains, one of which may be CSL. It was reviewed last week, and is an example of a quality stock which has been oversold this week, and is likely to recover soon.

The major banks have also been sold-down, but whether they will rebound  so strongly is in doubt, since most are near all time highs.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Categories: Chart Analyses, Trading opinion

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