Monthly Archive for December, 2009

Is a Stock Market Surge Building?

Published on December 19, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments

The depressing and demoralising sideways trend of the stock markets continued last week and no particularly material changes were made. The overhead resistance that is above the S&P 500 and the FTSE100 continue to oppress and restrain any potential upward move. Basically, the FTSE 100 and FTSE 250 indices have failed to make any upward progress for a total of 13 weeks now. As we have commented, this is depressing enough but also it does increase the posssibility of a serious fall if there were to be some (international) bad news. Let’s just hope that it is only good news – at least until the resistance levels are overcome.

However, there is just a possiblity – no more than that at this stage – that there might be a prices surge in the offing. Our (propriatary) Momentum Indicator is pushing on upwards and has brokenout above old highs. This indicator is based on the ratio of stock price increases against decreases and so is, usually, a reasonably good indicator of future moves on the stock market. We show below a chart of each of the FTSE 100 and the FTSE 250 with the Momentum Indicator shown (in blue) in the lower half of the chart. Note how it has taken off upwards of late without, so far, there being any corresponding increase in the index. Maybe, just maybe, the index will react positively within the next week or two (or three). Let’s hope so.

Momentum Idx on FTSE250 - 970Momentum Idx on FTSE 100 - 970

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

Will Compass Hit 470p??

Published on December 16, 2009 in ShareHunter News. 0 Comments Tags: , , .

Our purchase of Compass (cpg) on the 27th November (at424p) was linked to a target price of 470p;  a +10.8% move which would create a return of +100% of the deposit on a CFD trade.

But this market seems to keep wanting to play with us, if not to annoy us, with its seeming intransigence because yesterday it climbed again and, as we held our breath waiting for the trade to be closed on our target price, …it reached 469.9p before dropping back just before the market close!!!

Annoying or what. Ah well, perhaps today. The main point is that the dominant trend is up and so higher prices should continue to show and our exit stop is above the entry price so we should be in a ‘no-lose’ situation.

Review of the FTSE, S&P, DJIA and Nasdaq Market Indices

Published on December 13, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , .

The major indices have moved sideways for several weeks now. This is making life a little difficult as it does tend to have an attrition effect on our trading. This is simply because of the up and down whipsawing nature of a sideways moving market which creates an higher incidence losing trades as protective stops are hit.

So we ask ourselves, should we be in this market at all? Would it not be more sensible just to sit this period out on the sidelines and wait for a more positive directional trend to set in?And we answer ourselves by again analysing the trending signals being given by each market index and, again, coming to the conclusion that we should stay in and keep trading.

The main point being that although the risk of a downside move is increasing slightly by the week as the indices fail to make upward progress the fact is that the indices are holding their own, moving sideways, within the overall dominant Uptrend. The very fact that it is an Uptrend indicates that higher prices should continue – even though there will be price consolidations and corrections from time to time.

So, we worry and fret that the next bit of bad news could cause a tumble in share prices but we remain true to the faith that the dominant trend will assert itself and, whilst it is an Uptrend, take share prices higher at some point. Any tumble could be relatively short lived anyway as all of the major indices have potential support levels not far below current prices.

It is an important part of the decision to stay invested and investing that, after such a relatively long time going sideways, the markets are much more likely to pole-vault upwards once they do start to move. The crucial level is, as we have repeated for several weeks now, the 1122 level on the S&P 500. If that is broken to the upside then just watch (and, if invested, enjoy) the resulting rush upwards in share prices in London as well as on Wall Street.

To shorthand the individual stock market reviews here is our view of the potential prices that the markets could move up to, together with the first levels of potential support in the event of a ‘bad news’ reaction –

Market                   last week                                             potential level                                 support level

when Uptrend reasserts                   if market falls

—————       ———————                                    ——————————-                  ———————

FTSE 100         Weak. No progress for 8 wks                         5770                                          5108 (then 4670)

FTSE 250         Weak. No progress for 12 wks                      10600                                          8888 (then 7980)

FTSE SmCap   Weak. Becoming endemic                               2910 (then 3230)                        2425

S&P 500           Stalled at resistance level (1111/1122)            1290                                           1000 (then 940)

DJIA                 Pushing upwards                                           10785 (then 11800)                      9705 (if 10333 fails)

NASD 100        Stalled. 5 wks sideways                                   1827 (then 2040)                         1740 ( then 1629)

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

Will the stock market go Up or Down?

Published on December 6, 2009 in Education and Market Reviews. 0 Comments Tags: , , , , , .

Our ‘Momentum Indicator’ perked up a little last week – indicating a slight increase in the number of stocks achieving higher prices. This gives cause for optimism that the 1122 level on the S&P 500 index might, soon, be overcome.

Make no mistake about it; that index and that level are pivotal for the future movement of share prices in London as well as on Wall Street.

Nothing has really changed from last week’s analysis; the markets all moved sideways. But perhaps the significant factor is that they didn’t fall back. There is an underlying indication of potential such that if, when, the S&P 500 manages to breakout above that 1122 level we can expect some fireworks.

The S&P itself should rise to 1260 area; the Dow is likely to move up to the 11700 area; the FTSE 250 would be set to move up to the 10500 level and the FTSE 100 to the 5770 level. And these levels may be reached withing a matter of a few days. All dependent on the S&P 500 breaking above the 1122 level!

And it is “if and when” so, for the present, the markets remain rather quiescent – but suggesting that they are building that ‘head of steam’ that we have written about previously.

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

BANK SHARES – IS THIS THE BOTTOM?

Published on December 4, 2009 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , .

Standard Bank (stan) and HSBC (hsba) continue in Uptrend and so hint at higher prices to come whilst Barclays (barc) is suffering a 20% price fall from its October high and is not presenting such a promising future at the moment but it is Royal Bank of Scotland (rbs) and Lloyds (lloy) that are the real lemons – leaving a bitter aftertaste.

Both RBS and Lloyds remain in Downtrend; the same downtrend that started in July 2007 and identified and alerted by ShareHunter at the time. With RBS at 34p the possibility that it may test again its all-time-low at 10p (Jan ‘09) becomes a probability with the downtrend remaining in force.

For Lloyds the position is even worse. Those investors who bought (against the trend) when the price moved up in March and again in August to the plateau at the 110p area are now nursing another severe financial headache with last week’s collapse back down to the 55p area.That collapse represents an overnight 50% loss of the capital those buyers invested.

But it could all have been so easily avoided. At ShareHunter we have two rules, given to members, which are designed to avoid such ‘avoidable’ losses – 1) Never trade contrary to the dominant trend (i.e. don’t buy in a downtrend) and 2) Never (ever!) try to guess the bottom (of a stock or of the market). More money is lost by investors trying to guess a bottom price of a stock or of the market than for any other reason.

In fact, perhaps the most expensive words in the English language are …”it can’t go any lower”!! It is not just the Panto season that let’s us answer …”Oh yes it can”!.

At ShareHunter we are always available to provide a free opinion of a stock before you buy.

Click on the chart to enlarge -

LLOYDS Bank