Market Review Update as at 5th April

The markets are, quite frankly, in a bit of a mess – all over the place. It is a very interesting set of charts that confronts us. The FTSE 250 continues to be the strongest index and is edging closer to swinging out of its downtrend. But it is alone (amongst more than equals) in this regard and we wonder if we can seriously believe that the FTSE 250 is going to show the World the way to go (perhaps Gordon Brown is doing the buying to send it upwards so as to maintain his self believing world dominance!).

The ‘normal’ behaviour (if that term can ever be applied to stock markets) one would expect it to be the large companies – those with hefty reserves and with best prospects for surviving this vicious downturn in World values and trade that would attract the main buying interest; but it is these companies that seem to be losing out (in terms of share buying interest) to the smaller and even small-cap companies. Again, ‘normally’ one would expect the smaller companies to suffer share price reductions for longer.

But here we have the three ‘Big Sisters’ in the form of the FTSE 100, the DJIA and the S&P 500 all still showing largely negative tendencies and trends whereas the smaller FTSE 250 and even the FTSE SmCap markets are showing increasing signs of buying interest and strength. Should these trends continue into the coming week then we can expect to be alerting you to new ‘buy now’ alerts. And there are plenty of (possibly excellent) candidates just waiting for their index (the FTSE 250 particularly) to confirm its move out of the ‘Stage 4′ Downtrend that has held sway since late 2007 into a new ‘Stage 1′ Accumulation trend.

If (and we should repeat ‘if’ at this stage) this happens then we will be able to put out ‘buy’ alerts for shares in sectors that have themselves moved into a ‘Stage 1′ trend.

After 2 years of telling you not to buy shares, here we may be at last, on the cusp of a change – OR NOT – it may yet all revert to the current dominant (down) trend – so let’s not jump the gun.

We use 8 separate trend indicators when analysing the trends of the main indices; here is the current make-up of each. Note just how ‘out or sync’ is the FTSE 250 (and, to a slightly lesser extent, the FTSE SmCap) with the other indices:

-                        Positive (for Uptrend)                  Neutral (indecisive)                   Negative (for Downtrend)

FTSE 100                         0                                              4                                             4

FTSE250                         4                                              3                                             1

FTSE SmCap                  4                                              0                                             4

S&P 500                         2                                              0                                             6

DJIA                                2                                              1                                             5

NASD 100                     2                                              4                                             2