Monthly Archive for October, 2009

At a time when there have been big falls on the stock market it is salutary to see that it is none-the-less possible to make good profits from careful and disciplined share trading. The results for our model CFD/Spread Betting Account show the super profits that have been achieved over the last 4 months – turning £20,000 into £32,800 (allowance for slippage and commissions will reduce the total a bit, but not significantly).

Not one of ShareHunter members will have been surprised or taken unawares by the falls in share prices this week. We have warned for over 2 weeks that our proprietary ‘Momentum Index’ was signalling that a market top was likely to form. Our ‘Ides of October’ report, back in August, warned of the possibility of a market reversal (although it is not yet anywhere near the depth and severity of another crash). And our weekly Stock Market Reviews have illustrated how all of the major stock markets were testing significant resistance levels.

Of course the fundamentalists have to find a reason to justify any move on the stock market and that given for yesterday’s big fall is that it was due to “…the uncertainty of the strength of the economic recovery combined with disappointment at the US housing statistics…” Yes. OK – but we know that it is the technical aspects at work in the market with the effect of time cycles and of the psychological and mathematical basis of support and resistance price levels being achieved or denied and added to by the most basic of economic rules – if supply (selling) outweighs demand (buying) prices will fall!!QED.

And right on the 80^th anniversary of the start of the great Wall Street Crash our modern markets all turn heavily South. Bit spooky that!

It now remains to be seen if this is the start of a major decline or if it is going to be just a blip on the face of the uptrend in share prices. How will we know?…well that’s relatively straightforward:

The UK market was kept up by the US S&P 500 needing to climb to test resistance at the 1100 level. This it did and immediately started to fall back. As a result the FTSE 100 fell to our long recognised support/resistance level at 5100 and the FTSE 250 fell to the long recognised support/resistance level at 8888.

Now, if these indices close below these levels over the next week or two then they will fall much further – the FTSE 100 to 4660 area and the FTSE 250 to the 8033 level area. That would be a major downmove and possibly presage even further falls. Watch this space…better still join us at ShareHunter and find how to grow your profits and avoid the big falls.

Barclays:

General situation:

In an Uptrend which, if it continues, should provide higher prices….The steep downtrend from the 800p level down to the 50p area ended, as can be seen from the charts below, with a double bottom formation in Jan. and Mar. ’09. Note the spikey high volumes – indicating the heavy change over of shareholders. This also signalled the end of the downtrend.

Then, after a 5 month (Jan to May ‘09) Accumulation (or Basing) trend the Uptrend started. This was confirmed by the crossover (arrowed) of the  of the 34 week and 13 week exponential moving averages on the weekly chart and their equivalents on the daily chart.

This Uptrend is still in play although, since August, it has been muted. The reason is the resistance at the 397p level area which was created by the lows in Jan. and Mar.’08 and the highs in Aug. and Sept. ’08 (“old lows create new highs”).

The movement of the share price measured against the movement in the FTSE 100 index is recorded as its ‘Relative Strength’ (shown as the coloured dotted ‘Rel.Str.’ line on the charts) and this shows that the share price of Barclays is progressing significantly below the average of the FTSE 100 shares.

On the weekly chart there are two resistance levels shown – the 397p level (mentioned above) and the 422p level. This higher level is the halfway point (the 50% retracement) of the long Feb ’07 to Jan ’09 downtrend and it represents a level of potential resistance to higher prices. Additionally, whilst the price remains below this ‘50%’ level it is considered as being potentially weak and more susceptible to sudden down moves.

Click on chart to enlarge it -

If you are looking to sell: The stock is in Uptrend and so could be held in expectation of that trend continuing and providing further increases in the price (“ the trend is your friend”). However, if the price should fall back and go below the 310p level then the trend will have likely changed and in which case the price could then fall a lot lower.

So, we suggest an exit stop of 310p or thereabouts or, if you originally bought your shares at a much higher price and have been holding on to try to recover a larger proportion of your loss and you do not want to lose any more then you might consider an exit stop of, say, the 345p level.

It is worth considering that, as the share price is performing below the average (of the FTSE 100 stocks as a whole) there are much better opportunities with some of those other stocks to effect the recovery of your capital (“the lost opportunity cost”).

If you are thinking of buying: Well, yes – the stock is in Uptrend after all and so higher prices are likely but we would suggest that you wait until the price has risen above the 397p level and then fallen back and made a new (and higher) low on or above 397p. Preferably that the price has closed above 422p as well.

It is acknowledged that you will ‘lose’ some of the growth from its present level but, frankly, there is more danger that it may not succeed in getting above 422p and you will then probably nurse a loss. And, if the price does rise above 422p then it is likely to move very quickly up to the 580p level before meeting any further resistance – and that would produce a tidy profit.

ShareHunter.com 21 Oct.

For analyses of Lloyds, RBS, HSBC and Standard please email to – admin@sharehunter.com – with “Bank analysis please” entered into the subject line and we will email them to you by return.

The answer is a qualified ‘Yes’. The dominant trend of the Stock Markets (UK and US) is an Uptrend; this implies that, with the continuation of the trend, higher share prices are in store so why not go ahead and buy – provided you have done your research and identified which shares offer the best profit potential. But (there always is a ‘but’ when considering investing in shares) the degree of risk of a sizeable retracement is now much greater than it was a few weeks ago ( we calculate it is currently an 85% chance of a sizeable downturn) so it might be better to wait for a pull back before buying shares or equity based funds.

ShareHunter’s analysis of current Stock Market trends is always available to ShareHunter members as is the choice of medium to long term stock picks (for SIPPs and personal equity portfolios) and of short term share trades (‘hot stocks’) for CFD and Spread Betting.

Because of the potential for a reversal in share prices there has been no long term alerts for several weeks but the short term share trading has performed brilliantly over the last 3 months producing over 40% gain on the model CFD/Spread Bet Account and there are currently 26 open trades with the happy position of 15 of them being in profit if they were all stopped out tomorrow!

So, right time to buy shares? – Yes, provided a) that you select shares that offer the best potential for a fast move up the price scale and b) you trade for the short term and use a strict exit-stop program so that you are not left in the market if there is a general collapse of stock prices and c) you get ShareHunter to ‘hold your hand’ and guide you up the pathway to profits.

An article in The Sunday Telegraph on 20th Sept.  confirmed that “timely stock tips really could lead to a luxury lifestyle”.

This is welcome confirmation of what the ShareHunter Alerts service is all about. It is our raison d’etre. The ShareHunter ‘Trader’ Alerts has now notched up over £8000 profit in the last 3 months (based on a £20,000 CFD/Spread Betting account and excl. slippage and commissions) and, over the last 6 years the ‘Investor’ Alerts have achieved and average annual profit of +70%.

How come the ShareHunter Alerts service can be so profitable? Well, it is because we follow what the market is telling us rather than trying to guess which stock is going to up or down. We do this by reading the charts. The chart tells us nearly all we need to know as it contains all of the information known about a company and, even more importantly, it tells us if a share is in demand (that there are more buyers than sellers) or if the sellers are in the majority.

Most people get their information from a ‘hot tip’ picked up at a party or in the office; otherwise from the newspaper, television or a stock broker. And, almost invariably, the information is either ’self interested’ or ‘old news’ as it will already have been absorbed by the market.

The stock market is a very fast and efficient discounter of information. This means that as soon as a piece of information becomes public it is already reflected in the share price. This means that most investors are making their investment decisions based on ‘old news’.

The alternative is to develop the ability to read the chart. All the information is in there. The art is being able to identify what the chart, and therefore, the market itself is telling you. Are people buying the stock or are they ignoring it; is a sell off about to occur. This skill is something that we at ShareHunter have learnt and developed over many years and it is how we do manage to identify the likely profit making trades that are supporting our members in their quest for that ‘luxury lifestyle’.