Technical Analysis: 27 September 2019

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Violeta Todorova
Author name:
By Violeta Todorova
Job title:
Senior Technical Analyst
Date posted:
27 September 2019, 4:27 PM

S&P 500 – Hesitates around 3,000

The correction from the July 2019 high has found support at 2,822 (below our target of 2,880) from where a rebound has unfolded over the past month. The up swing re-visited its all-time high of 3,027 where selling pressure appears to be building up.

The RSI and the MACD indicators have approached overbought territory suggesting that the short term rally is likely to pause soon.

The weekly stochastic indicator has reached overbought territory, pointing to a likely pull back in the short term.

Tuesday’s price action broke below minor support of 2,978 suggesting that a short term top could be in the making.

Given the proximity to key resistance and the overbought momentum readings, we are of the view that the chances of a 5-10% move from here are more likely to be to the downside.

The initial downside price target is 2,850.

The new key support to monitor moving forward is 2,822.

S&P/ASX 200 (XJO) – Approaching its all-time high

The correction from the July 2019 high has found support at 6,393 from where a strong rebound unfolded over the past month.

The medium term up trend line has been broken downwards in August 2019 and at present the index is trading in a range between 6,396 and 6,875 which are important support and resistance levels respectively.

While at this point there is no sign that the rally is reversing course, we note that the weekly and daily momentum indicators are approaching overbought levels and the price is approaching its all-time high of 6,875 where initial selling pressure is likely to arise.

Given the proximity to key resistance, the overbought momentum levels and the seasonally weak month of October, at this juncture we remain cautious and see the short term upside from here as limited.

AMP Ltd (AMP) – Short term pull back

AMP has been trading in a primary down trend since March 2018 which is still firmly intact.

The recent short term up swing has rebounded to its previous resistance of $1.94 where initial selling pressure is likely to arise.

The RSI and the MACD indicators have reached overbought territory suggesting that the price is likely to pull back in the short term.

The potential downside price target is $1.65.

Overall, despite the stock being oversold on a long term basis, we don’t see a sign of reversal of the primary down trend yet.

Oil Search (OSH) – Short term pull back

OSH has been trading in a primary down trend since October 2018 which is still technically intact.

The current short term up swing has lost momentum over the past few days with Wednesday’s price breaking below minor support of $7.49.

The RSI and the MACD indicators have reached overbought territory suggesting that the price could pull back in the short term.

The expected short term share price weakness would provide a buying opportunity.

We would monitor the price closely and will provide an update in due course.

NEXTDC (NXT) – Trading in a range

The decline from the June 2018 high has lost momentum and over the past year the price has been trading sideways, fluctuating between $5.61 and $7.25.

The current secondary down swing appears headed to its key support of $5.61 where initial buying interest is likely to arise again and is the area where we would like to accumulate the stock.

The potential upside price target is $6.60. Over the long term, our view on the stock remains neutral and we favor further sideways trading in the coming months.

QBE Insurance Group (QBE) – Approaching key resistance

The down trend from the September 2007 high has lost momentum over the past seven years and the price has been fluctuating between $9.22 and $15.00.

The rally from the December 2018 low is approaching its band of resistance between $13.16 and $13.62 where initial selling pressure may arise.

While at this point there is no sign the rally is reversing course, given the proximity to key resistance, we are of the view that the near term upside from here could be limited.

Collins Foods (CKF) – Overbought

CKF has been trading in a strong up trend since July 2018 which is still technically intact.

The current short term up swing has pushed the price into an all-time high of $10.31 where profit taking is likely to arise in the short term.

The weekly and daily momentum indicators have reached overbought territory suggesting that the price is likely to pull back in the short term.

Over the long we don’t see a reversal of the primary up trend and at this point we only favor short term weakness.

Nearmap (NEA) – Accumulate

After posting a record high of $4.29, the price reversed course and has been trading in a correction mode over the past three months.

While at this point there is no clear reversal signal, the selling pressure has clearly eased and the price has been trading sideways, fluctuating between $2.48 and $2.83.

The weekly and daily momentum indicators have approached oversold territory suggesting that the price is likely to bounce soon.

The first upside price target is $2.80 followed by $3.05. We are comfortable to open a small long position at current price levels.

More information

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Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents ("Morgans") do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

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