Monthly Archive for November, 2009

Stock Market Trends – and Dubai Debts

Published on November 30, 2009 in Education and Market Reviews. 0 Comments Tags: , , , , .

The ShareHunter ‘Momentum Index’ has, for several weeks now, accurately signalled that the potential for higher prices remains limited. And that continues to be our main message – although we must observe that the dominant trend of the markets is upward and so higher prices will, eventually, occur if that trend holds good.

We are now centrering our attention on the S&P 500 Index. This has continued to hit its head on the 1111/1122 area of resistance and there will be no significant general increase in share prices – on any major market index – until the S&P can get, and stay, above that level. Once it does manage to close above 1122 then we can expect some fast moves up the price scale in both US and UK stock prices.

But there remains the always present danger of a sharp selloff whilst the S&P remains below the resistance. The longer it stays under 1111/1122 the greater becomes the risk, and liklihood, of a major price correction. Thankfully, last week’s ‘sandstorm’ in Dubai does not look likely to have too much of an adverse effect on the major markets and may be no more than a relatively minor hiccup in the general movement of stock prices (remember, the dominant trend is upwards).

The fund managers, who have to consider their performance statistics come 31st December will move heavily to prevent any major selloff during the last 4 weeks of this year but that does rather leave early 2010 as looking cold and vulnerable (very vulnerable if the S&P 500 is still below that resistance and our Momentum Index hasn’t pointed upwards!).

Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/

Is the Stock Market going to Up or Down?

Published on November 22, 2009 in Education and Market Reviews. 0 Comments Tags: , , , , .

Our proprietary ‘Momentum’ indicator has been in a sideways move since early September.There is no upward momentum – only a sideways trend with a slight downward inclination. This indicates that the growth prospect for the major UK and US stock market indices is stalled and may be limited.

This was reflected in the lack of upward movement in the indices last week and, more importantly, it implies a potential for a top to form and for the indices to trickle downwards.

At this stage any such retracement in the market indices looks as though it should be relatively gentle as there is potentially strong support not far below current index levels (see the individual markets analysis). But the danger then will be that a relatively gentle correction can turn nasty and morph into a full blown retreat. That remains a possiblity, we think, for 2010; at the moment the dominant trend is still North facing and, as such, it promises higher share prices to come but this can only happen if the resistance pressures lying just overhead (see the individual market analyses) can be overcome; with a moribund ‘Momentum’ indicator this is problematic.

Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/

Published on November 14, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments

The markets remain in uptrends but with potential resistance overhead.

The FTSE 100 is displaying potential to push higher and could, if nothing untoward happens to the US market, eventually reach the 5770 area; The FTSE 250 is moving sideways under resistance and needs to get above the 9610 level before it can produce any extra real gains.

The DJIA has now reached serious potential resistance at the 10333 level (and so could retrace next week) whilst the S&P 500 is meandering along below resistance and needing some extra (buying) fuel to take it up through its overhead resistance at the 1111/1122 area.

The Nasdaq100 is in strong Uptrend and pushing up and will test the 1827 level shortly.

So, in summary, the dominant trends remain Uptrends and, as such, promise higher values to come but heavyish overhead resistance may put a damper on the party for the next week or two. The other side of that coin though is that champagne should start to flow if/when those resistance levels are broken.

Hot Share Tips and Stock Picking Services

Published on November 13, 2009 in Education and ShareHunter News. 0 Comments Tags: , , , , , , , , , , .

Only gradually have we, at ShareHunter, become aware of the difference that exists between what a lot of people say they want when it comes to investing in stocks and shares for profit and what they really need.

Our increasing awareness of this growing problem, one that is constantly casting many an investor onto the financial scrapheap, shows that there is fault on both sides. The companies that provide all of the ‘hot tip’ hype are, of course, milking the unaware investor for as much as they can; but the other side of the coin is that not all investors are genuine seekers of truth either – many of those who subscribe to the cheaper ‘hot tips’ are not disciplined investors at all but are just plain greedy and want to make a fast buck to boast about.

There are innumerable ‘hot stock’ type services available over the internet but very few of them actually provide a service that will allow a subscriber to profit from following the tips. All of them provide, or purport to provide, the latest ‘top share tip’ but few, very few, offer anything like a back up or risk control service to support the subscriber as he or she tries to make money from the stock market.

It is a salutary fact that nearly 90% of individuals who try to make money trading in stocks end up not just losing but losing nearly all of their available capital. Some, of course, are just plain unlucky; yes, there is a large element of luck involved in timing an entry into the market for the first time. But when it is discipline and knowledge that dictate the accrual of profits the hyped investor is left very much on his own.  Most investors action their ‘hot tips’ without any concept of when to take their profit or how to protect the downside.

Most tipster companies are just after the fast buck so they charge little and promise much; they want your email address so that they can sell more to you later – often at an higher price (by promising you something close to the moon) and they need new subscribers all the time in order to replace those who fall by the wayside having lost all of their seed-corn trading capital on the bum-steer stock tips.

Then again many who subscribe to these cheapo tipsheets do not want to be bothered learning how to invest properly; they actually want to be hyped up, they enjoy it, they think that because someone has provided a ‘hot tip’ that it is bound to make money. The greater the hype the more they are sucked (and suckered!) in. Such people do not understand or even want to know what it takes to be a successful investor on the stock market.

ShareHunter is one of the very few companies that provides a ‘cradle to grave’ type share alerts service where not only is the original stock alert carefully identified and analysed (from big, liquid stocks, not hard-to-sell small cap or AIM stocks) but also where stop-loss and profit-protection prices are provided and continually updated so no subscriber is left alone without professional and successful back up. In turn this means that ShareHunter does not seek subscribers through hype but provides a genuine service based on trading expertise and experience. Promises of great riches are not made – even though that may be the end result!!

How to Calculate Stop-Loss prices (so you end up with big profits).

Published on November 11, 2009 in Uncategorized. 0 Comments Tags: , .

It is very tempting to lock in a profit as soon as it appears. And it is very annoying if one doesn’t do so and then still get stopped out – at a loss!! BUT, you have to allow sufficient space between the normal trading range of the share and your exit-stop price to let the share price have room to ‘breath normally’.

There is just no point in setting a very close stop price as soon as your trade moves into profit and getting stopped out at a small profit when a bit of patience and allowing room for the price to move normally (down as well as up) would have meant that a bigger profit would have been achieved.

It is very important to allow a profitable run to maximize otherwise there is little chance of  accumulating sufficient profits to outweigh accumulated losses.

Setting stop-loss prices is a mix of art and science. It is vital to calculate a (momentum based) stop-loss price for each individual stock that is based on the volatility of that stock’s price. The idea, practised by many, of just using a fixed percentage from the last closing price is clumsy and likely to lead to bigger losses being suffered overall.

Seriously, the best way to trade is to put your stop into the market and not look at the trade again until you need to revise it! It is so tempting to ‘bank’ a profit – but this should not be done at the risk of getting stopped out too soon.

The Outlook for Share Prices

Published on November 8, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , .

The support levels (5100 for the FTSE 100 and 8888 for the FTSE 250) held during a severe testing of them last week. This is a positive signal that the Uptrend is in reasonable shape and it confirms that higher share prices should continue.

However, there are three worries that cause concern and, until they are resolved, the continuance of the uptrend and of higher share prices cannot be taken for granted:

Worry 1 – To provide confirmation that all is well with the Uptrend we need these two indices to stay above those support levels again next week. If the sellers gain the upper hand then the market could take a tumble if the 5100 and 8888 levels are broken.

Worry 2 – Despite the positive moves on all the major markets last week our Momentum Index has contued to suggest that the indices may not go much higher and that a longer correction in share prices may be in the offing.

Worry 3 – The US S&P 500 is not yet displaying any real sense of positivity and, whilst it remains below the important resistance level at 1122 (it closed last week at 1069) it will be prone to weakness and at risk of sudden falls. And no matter what we would like to believe about the independence of the London market when Wall Street says “jump” the London stock market says “how high”! It is the S&P 500 index that we must watch and be mindful of.

Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/

Is the Stock Market going Up or Down?

Published on November 5, 2009 in Uncategorized. 0 Comments

The Market is still testing support levels. Yesterday’s big push by the bulls was significant and telling but the market is not out of the woods yet as the testing of support and resistance levels on the FTSE 100 and the FTSE 250, as detailed in our earlier report, is continuing.

It will not be until this week’s trading has finished (and, maybe, next week’s as well) that we shall be able to guage a definitive answer.

At the moment it does look as though the uptrend will continue allowing share prices to rise further but it would be wrong to take it for granted just yet.

Danger of a Stock Market Crash

Published on November 3, 2009 in Market Reviews and ShareHunter News. 1 Comment

From our weekend, and earlier, analysis reviews of the markets you will know that we were concerned that the FTSE 100 and the FTSE 250 ended last week sitting on our long-held support levels at 5100 and 8888 respectively and that these levels have to hold this week if a major downturn is to be avoided.

The important point is that the indices must close on or above these levels come Friday this week. So, there is time to go yet but this morning these levels are being broken and the screens are just a sea of red. That is why we have no confidence in proposing any new buy trades today (and it is a bit too early yet to suggest any short trades as the main trend is still upwards – so far!).

Our analysis indicates that this is a critical week for the market and it would be unwise to try to guess the outcome of this current battle.

Is The Stock Market Going To Crash?

Published on November 2, 2009 in Uncategorized. 0 Comments

This week the FTSE 100 must close above 5100; if it closes below this then we expect it to tumble to the 4660 level shortly afterwards. The FTSE 250 must close this week above 8880. If it doesn’t then it too will fall and this could be an 800 point fall to the 8030 level.

For a while last Friday it looked very much as though the previous day’s multi-point falls were going to be nothing more than a short term blip in the general upward moving trend of share prices, especially as the lows hit on Thursday coincided precisely with our long held support levels for both the FTSE 100 and the FTSE 250.

And, as the current dominant long term trend is still an Uptrend, it may well still be the case that share price and the FTSE indices will resume their upward direction and continue to increase.

However, the devil was in the detail! – after a weak opening on Wall Street, the Footsie began to fall back again and soon wiped out the morning’s gains. At the close the FTSE indices were once again hitting on our defined support levels and this means that there is a critical aspect to be watched this week because, if the support levels fail, the markets are likely to tumble, possibly crash!

So there you have it, the next week or two will show which way the markets are heading and, just at the moment, there is a chance that it could get a bit painful for anyone locked into the market.

Individual market commentary and illustrative charts are available at http://www.sharehunter.com/news/market-review/

Should You Buy RBS before the Results?

Published on November 2, 2009 in Uncategorized. 0 Comments

A Technical Analysis view -

Royal Bank of Scotland; the general situation:

A sad example of what can go wrong when you ‘buy and hold’ and, unfortunately, one that offers little hope of any real recovery for some time to come….

From the final low at 10p in January ‘09 the price moved into a Basing trend (visit www.sharehunter.com/technical.php for explanation) and has managed some, relatively modest, price recovery. It is still some way away from the point where it may be considered as a recovery prospect ‘buy’.

The price collapse of this leading and popular share represents a salutary lesson in the danger of a ‘buy and hold’ approach to share portfolio investment; it is more a lesson in ‘buy and lose your shirt’ which can, so often, be the end result of relying on a non-active management approach to share investment.

Not until at least two events occur can RBS be considered as anything like a safe ‘buy’ likely to provide profitable gain. The first event is the crossover of the two Moving Averages. This is more easily seen on the Daily price chart below; they have not yet crossed over (marked by the green arrow). The cross, upwards, of the green MA over the red MA will be a signal that the trend is changing from a Basing trend to an Uptrend. The second event is the price breaking out above the resistance levels (shown on both charts below).

Don’t be tempted to buy too early. It is safer to wait until interested buyers – as opposed to speculative punters – have bought and helped the price to rise above the resistance at both the 58p level and the 70p level.

Daily prices chart -RBS - Daily

Weekly prices chart -RBS - weekly

If you are thinking of buying: our only suggestion at this stage would be “don’t” – whether good results or not are in the offing.

Whilst in a Basing trend, as now, the price is liable to sharp moves in either direction. For example, if you listened to the (deeply flawed) advice of buying low in order to “average your loss” (what rubbish!) and you had bought this stock in August at, say, 58p then, with the price today at 39p, you would be nursing a 33% loss of your capital.

It will be much better to wait until the stock tells you that now is the best time to buy for maximum growth potential. And that will only be when two events mentioned above have taken place; and, better still, after it has risen up and then fallen back to the 70p level and made a new, and higher, low above it – that’s when the price is really likely to take off.

And, by that time, the second event will have taken place and the faster moving average (green) will have crossed, going upwards, the slower moving average (red). This is always a strong signal that an Uptrend has started.

So, when the price is around 80p after making a new higher low above 70p then it will be starting its recovery journey up towards a test of the resistance at the 370/390p level area. And that will produce a really good profit potential.

If you are looking to sell: If you are still caught in the net then, frankly, there is not much that you can do other than hope for an early recovery. One option is, of course, to sell out at best price now and thereby release the balance of your imprisoned capital. But then ‘Murphy’s Law will always operate and the price will undoubtedly increase after your exit! The only plus would be that you could use your released capital to good effect by trading in other, more growth orientated, stocks.

The one thing not to do is to “average your loss” by buying more RBS stock as these low prices. Don’t do it. It has the potential to ruin you if, as is quite possible and as we have noted above, the low price can always go lower!!

To have to stay in with such a wretched investment is a miserable experience and, until a good Uptrend gets established, it is something akin to being “between a rock and a hard place”. But there is little that you can do about it and you have our genuine sympathy.