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Bleeding from the 38.2% Fib, fresh bearish impulse underway

  • Commodity markets leading the way in terms of sentiment weighing on global stocks and economic outlook.
  • ASX 200 a touch away from 5090s target within the current support structure which bulls will seek to hold.

Australia’s S&P/ASX 200 (AXJO) index is down 0.72%, of the lows from early trade where the index dropped to 5,100 points (over 2.2%) after oil prices continued to slump overnight. 

All industry sectors were downtrodden with energy stocks suffering the largest falls, down a collective 3.94 per cent. The carnage in crude continued. The May WTI contract got back above $10 although the June contract dropped significantly from a $22 handle sweet spot to a single-digit territory with a print of $6.5 before a modest bounce in late trading to $12.88. 

“Not even an unscheduled OPEC and OPEC+ meeting and confirmation that Trump was ordering a plan to make funds available for oil and gas companies could lighten the mood,” analysts at Westpac explained.

US stocks also suffered the renewed doom and gloom setbacks in the sector, sending benchmarks lower to critical support structure territories – if they blow, it could be the beginnings of the next bearish impulses in global stock prices.

The OPEC/ OPEC+ meeting did not yield any policy shifts and the Texas Railroad Commission opted to “put off a decision on whether to impose oil-production quotas until May 5 at the earliest” according to Bloomberg. API reported yet another whopping rise in inventory with a 13.2mb rise in stockpiles and 4.9mb at Cushing. While that is down slightly from the average of 5.2mb per week that the EIA has reported, if we continue at this pace then Cushing will be full in 3 weeks 

– the analysts at Westpac argued. 

This has left a sour taste in the commodity sector, and the complex is likely leading investors to think twice about buying into the optimism of easing of the economic lockdowns in individual nations that are taking a gamble of the contagion of COVID-19 for the sake of saving their economies from an outright depression.

The most impacted stocks have been Beach Energy with its shares down over 7 per cent, to $1.17, (albeit with a recovery to $1.23 at time of writing).  Miners were also stuck underground with the South32 off a whopping 7% at the time of writing, falling from 104.50 to a low of 93.98. While still lower, healthcare, communications, and financials are out-performing on the day. 

ASX 200 Index: Finally rejected at 38.2% Fibo

The ASX 200 is lost its grip of the 38.2% Fibonacci level (5470). 5310 was a prior support and resistance zone that was holding up the downside correction. 5100 has so far held, a touch away from 5090s target within the current support structure which bulls will seek to hold for confirmation of a run towards 5645 as the next resistance structure through prior highs. On a continuation tot h downside, bears will be looking for an extension below the COVID-19 lows of 4402 for a fresh impulse in a new bearish extension of the bear market. 

 

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