Monthly Archive for May, 2010

The Biggest Buy Signal You Have Ever Seen???

Published on May 28, 2010 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , .

We have just read an article with this heading. OK the article does include a number of “maybe’s” so it is perhaps written with a tongue in cheek but we feel that it is a dangerous claim to make so publicly as many people will not read the full article and will be thinking that some expert is calling this stage of the FTSE as a huge buying opportunity.

It IS NOT. This week’s rises on the FTSE have been marginal and far from decisive. Indeed, this week could be the very week that shapes the start of an almighty crash in share values. Please do not get carried away and think and act as if the market is going to burst up towards 6000 (as that careless article claims). It might but the risk is that it might not and the FTSE might instead tank down to 5000 and then on down to 4750.

The ShareHunter  Review of  ‘The FTSE- Where Next?’ will  explain and illustrate why and will be available over this weekend. Just ask us for a copy.

The FTSE – Up or Down? Is it going to Crash?

Published on May 24, 2010 in Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , .

Despite the doom and gloom in the press and all of the dire warnings of Armageddon to come (although there is no denying that is a possibility) all that has happened to the FTSE so far is that it has retraced back to its important support area of 5100/5000. Nothing new in that as it has been there 3 times in the last 3 months and, on each of those occasions, it has found support and rallied.

But this time it could be different, for the following (technical) reasons:

1. This time the FTSE has fallen below the level of its 30wk. moving average – a negative signal indicating a lack of support and

2. This is the 4th occasion that is has sought support at the 5100/5000 area – and historical records show that the 4th occasion at the same level usually results in a break of that level; (not only that but, after a 4th occasion, the following action can be fast and steep).

So, there is the possibility that the FTSE is going to plummet down to the 4747 level and, possibly, then a lot further (down to 3500) but, for the moment, we must wait to see if support is forthcoming because if it is – on this 4th occasion – then the FTSE could rally back up to the 5400 area.This scenario does not make for easy trading; ‘shorts’ look to be the order of the day but would be stopped out if a rally does ensue. ‘Longs’ are perhaps even more dangerous just now as a price rally may be very short lived as there is a real danger of a price collapse.

Of the other markets, the S&P 500 has tumbled back down to its important support level at 1100 and it is displaying signals of weakness so the danger is that it could, soon, take a nose dive down to the 940 level area if support is not forthcoming this week. Much the same dismal picture applies to the DJIA where increasing weakness is suggesting the index might collapse by over 1000 points, down to mthe 8860 area. The Nasdaq 100 is currently resting and testing for support at the level of its 30wk. moving average. If it breaks below this it is likely to slip all the way down to the 1629 level area.

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

Is the FTSE about to Crash?

Published on May 18, 2010 in Education and Market Reviews. 0 Comments Tags: , , .

We are just not happy with the signals that we see coming from our analysis of the FTSE indices at the moment and we think it best to hold back from making any further new trades until the picture is clearer.

There is no point in investing just for the sake of wanting to be seen to be active; it would mean opening new trades in the hope of a price recovery setting in rather than, as we like to work, with the almost certainty of it happening!

The FTSE does have good potential support at the 5100 level so it may be that it will start to show more upside potential soon. On the other hand we are seeing an increasing potential for a collapse through that level.

Of our 7 separate trend indicators only 1 is showing as positive just now for the FTSE with 4 being actively negative and 2 showing as neutral. The picture this creates for us is suggesting that the dominant trend could be in course of change (from Up to Down); it is still too early to be confirmed that this is the case and there are still the positive aspects of the potential support for the FTSE at 5100 and the fact that the other major market indices, UK and US, are in slightly better shape and not (yet, at any rate) indicating quite so much negativity.

However, if the FTSE does break below 5100 then it has potential to fall to the 3500 area – and fast!

The Stock Market – to Rally or Crash?

Published on May 16, 2010 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , .

Every one of the major market indices that we report on every week is currently testing the level of its 30wk moving average (‘MA’). Why is this worthy of comment? It is because it is a common result of a test of the MA that the index (or share price for an individual stock) changes direction.

So for an index that has been falling and is now testing the level of its MA it is quite possible for it to now change direction and to rally. And that is exactly what might now happen for all of the major indices – but with the possible exception of the FTSE 100. We need the price action this week to confirm the direction change but the FTSE 250, the FTSE SmCap, the S&P 500, the Dow Jones Industrials and the Nasdaq 100 are all fallen to, and are now testing, the current level of their MAs and starting to bounce back.

The exception is the FTSE 100 which has already fallen through its MA. It has found temporary support at the important 5108 level and has managed to rally slightly – but only up to the level of its MA. In other words, if the usual result of a test of the MA level – a change in direction – occurs then the FTSE is due to fall again, not rally.

In this regard it is the FTSE that is out step with the rest of the major indices. It was only a couple of weeks ago when the FTSE led the rest of the world by falling sharply when all the other indices were reflecting an upward tendency that we suggested that it was unlikely that the FTSE was leading the way! We will not then make the same claim now as we could be a  wrong again. However, it has to be observed that with 5 other major indices suggesting that a rally may now be due the bias favours a rally for the FTSE 100 up from the 5108 support level.

The alternative scenario is that, if the FTSE is, again, showing the world’s markets the way to go then all are due for some steep falls and the FTSE itself will be due a damaging fall and, perhaps, to move into a longer term ‘bear’ trend. But, for the moment, this is the more distant scenario.

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

Is the worst over for the stock market? Are shares now safe?

Published on May 12, 2010 in Uncategorized. 0 Comments Tags: , , , .

The answer to our question is…Perhaps, but the stock market is not out of the woods yet.

Over the last few weeks the risks have been much increased so we ceased to call new trade alerts just before the FTSE began to tumble. That does not mean that we are brilliant or clairvoyant but it does mean that our daily analysis of the market trends is accurate and effective.

The current state of play is that the FTSE is still below potential resistance (at the 5400 level) in spite of the big rise earlier this week. This resistance could send the index sharply back down again; otherwise, if 5400 is overcome then share prices should move strongly ahead again and back up to test the 5770 level resistance. All this can be seen from the chart –

Interestingly, and perhaps indicating that there is an underlying and growing strength in the market as a whole, the FTSE 250 index is far more positive than its big sister (the FTSE 100). The FTSE 250 has found and bounced up from support at the 9610 level and is racing back up to test the 10500 level again. This is shown on the chart below –

So, nothing is for definite just yet. Risk remains above the norm although not nearly so high as it has been recently. The answer has to be to invest cautiously (as you know we started again, gently, this morning) and to keep a very close eye on the likely future direction of all share prices.

The Stock Market and a Hung Parliament

Published on May 11, 2010 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , .

Our recent analysis of the market has been of almost pin-point accuracy. This does give further credibilty to the whole strategy for making profits over the coming months and years. We hope that you will agree.

The analysis of the FTSE showed  three main levels of support and resistance as well as the liklihood of a directional change at the level of the FTSE’s 30wk moving average. Here is the chart up to yesterday –

The 5770 level was shown as a resistance level and that the FTSE, if it couldn’t get above it, would fall back to the 5400 ( the level of its 30wk moving average). We showed that the 5108 level was an important level of support which would be tested if 5400 failed to provide support.

Well, 5400 provided support for just one day, then the index fell steeply straight down to 5108 where it found support – just as the analysis said that it should!

From there, yesterday, the index rallied and where to? – straight back up to 5400 !! This is now a resistance level to further recovery.

You can see from the chart that the 5400 level is the third time that the index has met with its 30 wk moving average during the 2009-10 recovery and, as we have previously pointed out, the index usually changes direction at such a meeting. As the index has risen to the 5400 ‘meeting’ it could now change direction and fall back again (and, as we write, that is exactly what is happening).

So, The ShareHunter analysis has, as before, been entirely accurate. Such is the degree of volatility and uncertainty in the market at the moment that it is very difficult to know what direction the index will follow next but 5108 and 4944 hold the key. If they continue to provide support then our strategy will be buying stocks. If these levels fail then we will be shorting stocks because if the index breaks below 4944 then, according to the ShareHunter analysis, it will be likely that it is on its way down towards the 3500 level again.

Our strategy includes the prudence of ceasing to open new trades when the market direction is in turmoil and combined with the tight, risk reducing, stop-loss procedures has served all ShareHunter members very well indeed as they have not been exposed to the ‘whipsawing’ losing trades that many individual traders have suffered over the last couple of weeks.

Hung Parliament and the FTSE

Published on May 10, 2010 in Education and Market Reviews. 0 Comments Tags: , , , , , , .

Three weeks ago the FTSE 100 made its final attempt to get above our long-established resistance level at 5770. We have said that if it failed to breakout above 5770 the index would fall to the 5400 level to test the level of its 30wk moving average – and then possibly change direction to build for another attack at 5770. We did not expect quite such a dramatic collapse as happened on the markets last week. The FTSE is now fallen some 11% in the last three weeks, most of it last week!

The FTSE did stop at the 5400 support level, but only for a day; it then fell further and it has now closed the week slap bang on the more important support level at 5108. This has been on our chart for many months now as it is the 50% retracement level of the 2007-09 price collapse.

We have seen how well these support/resistance levels work over decades now and yet we never cease to be surprised how well they do work – time after time, market after market, yaer after year. What power it gives us – and you – to know when to get in and when to stay out of the market.

Provided you were following our trading suggestions and, particularly, our risk-reducing trading ‘rules’ then you will not have suffered any big losses at all with this latest market collapse. Our careful monitoring and raising of exit stops meant that our open trades were progressively closed over the last two weeks and really without any big hits (the largest being just 1.5% of capital) and our refusal to open new long trades last week kept us all out of the destruction of share prices that occurred last week. Well done.

So, where do we go from here. Looking at the major world stock markets they are all now testing for support at important levels. The markets are looking oversold so a recovery rally may well now be due to start this coming week bouncing up from the support levels. But we cannot yet be sure; we must wait for the markets to show us that they are in recovery mode as the danger is that the down move could become extended and prices could fall a lot further if it does (as per what happened in the 1974 hung parliament).You will recall our chart of the FT 30 index collapse during1974 hung parliament. We repeat it here –

And here is our chart of the current situation with the FTSE 100 index –

The FTSE has fallen to the important 5108 level (marked ‘1’) where is should find support and perhaps recover back up towards the 5770 level. But there is the prospect of it falling just a bit further, to the support level at 4944 (marked ‘2’). But, as you can clearly see, if it does follow the precedent set in 1974 and it fails to find support at either level and breaks down below 4944 then it is likely to go all the way down towards the 3500 level again.

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

The FTSE 100 Review

Published on May 3, 2010 in Education and Market Reviews. 0 Comments

Last week saw the FTSE tumble some 170 points. It was the worst performing index. At the moment, this is still only a correction within the dominant Uptrend and there is little to no indication of a more lengthy and serious decline ready to set in. We do anticipate that the FTSE could fall another 150 points or so, down to the 5400 area where it should find support.

What with the possibility of an indecisive general election result and the Greek tragedy playing their parts there is potential still for considerable volatility in share prices. We remain of the opinion that it would not be prudent to be buying (or selling) stocks until next week when these matters may have seen some resolution and with less uncertainty affecting market sentiment.

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