Stock Markets Review

The current technical analysis of the-

• FTSE 100, the FTSE 250
• FTSE SmCap
• S & P 500
• DJIA
• NASDAQ 100

ANALYSIS FOR THE PERIOD  – 31st August 2010 to 5th September 2010

The Overall Market Rating (OMR) , below, represents the percentage of stocks in each index in Stages 1 and 2 (a potential or an actual Uptrend);

An OMR below 50 indicates a ‘bear’ market and above 50 is an indication of a ‘bull’ market. (The figures in brackets show the OMR for the previous week) -

hisIn:	Stage1	Stage2	Stage3	Stage4	Overall Mkt Rating
FTSE 100	22%	20%	33%	25%	43 (39)
S&P 500	25%	15%	26%	34  %	40(37)

The Overall Market Rating for the both FTSE 350 and the S&P 500 have swung away from being definitive indications of Uptrend to below the 50 rating and, as such, they now indicate a Downtrend and the possible start of a longer and steep down turn.

Identifying the Trend -

Stage 1 - Accumulation/Stock Basing                           Stage 3 – Distribution/Topping out

Stage 2 – Uptrend/Rising Prices                                     Stage 4 – Downtrend/Declining Prices

Below, we provide two charts for each of the five market indices analysed. The shorter term (3+ year) chart allows easier recognition of some of the more recent features that we may comment on and then a longer term (8+ year) chart which shows the important highs and lows of previous years. We have provided longer term charts this week (up to 13 years) as it helps to illustrate the comaprative performance and absence of long term growth in the markets. Please click on each chart to enlarge.

FTSE 100 -   In a new ‘Stage 4′ Downtrend but trying to reverse -(selling or buying but great care needed) -

The index displayed the presence of some support last week and it now remains to be seen if this will lead to further rises in the coming weeks or if the support was but temporary.  The key levels remains as 5010 and 5350. If the index can get, and stay, above 5350 then the rally will renew and the trend should change to an uptrend but, if it falls below 5010 then (considerably) lower prices will follow. With the establishment of the Downtrend there will always be occasional rallies but these are likely to be only temporary (generally 3 to 5 weeks). The index is currently suggesting that it is going to return to the 4750 level area and then go lower, probably to the 4630 level and possibly to 3500 before any serious support might be forthcoming.

Chart (3+ year) -

Chart (8+-year) -

FTSE 250 – In a ‘Stage 3′  Distribution trend ( buying or selling but great care needed) -

This index has managed, so far, to stay above the support level at 9610 but last week it showed an increasing weakness and, importantly, it continues to test the 9800 level of ts 30wk moving average. This index is continuing to hold its own and, so far, has not succumbed to a swing in to a Downtrend but it is very important that the index stays above 9800. Should it weaken and fall below it then that could be the start of an eventual slide down to the important support level at 8888.

Chart(3+ year) -

Chart(8+ year) -

FTSE SmCap – In a  ‘Stage 3′ Distribution trend and close to moving into a new ‘Stage 4′ Downtrend  (selling only but only very selectively and care is needed) –

The index is still travelling sideways between the  support level at 2700 and the resistance level at 2910 as it has been for almost a year now.  If the 2700 support level should fail then this index is very likely to next visit the 2425 level to look for support there and could fall all the way down to the 2300 area. This index does not look strong as it remains underneath the level of its 30wk moving average (currently at the 2815 level) so great care is needed as individual stocks may be difficult to trade at a reasonable price if a slide does get going. Even without a slide, this index is suggesting that little is likely to be gained from trading smaller cap stocks at the present time.

Chart(3+ year) -

Chart(8+ year) -

S&P 500 - Swung into a new ‘Stage 4′ Downtrend – (selling only but great care needed) –

It is a significant warning that the index has failed, for the second time in the last few months, to break above the resistance created by the important 1111-1122 area. It also continues to remain below the level of its 30wk moving average which is now at the 1115 level.  Last week’s further push downwards from the test of the resistance levels suggests that there is continuing weakness and that the index is setting up for a fall back to the 1000 level and probably then to 940 .

Chart(3+ year) -

Chart(8+ year) -

DOW JONES IND – In a new ‘Stage 3′ Distribution trend – (buying or selling but care needed) -

Three weeks ago this index succeeded in breaking out above the resistance of the 10370 level after 12 weeks of trying but it then failed to find support to sustain the rally and it fell back below both its 30 wk moving average and the 10370 support level and last week it confirmed an underlying weakness.  The only potential for the index to rise above the 10370 level and sustain the break otherwise there is now potential for a bigger fall.

Chart (3+ year) -

Chart(8+ year) -

NASDAQ 100 - In a ‘Stage 3′  Distribution trend  ( buying or selling but great care needed) -

The rally up from the support of the 1740 level took the index up to meet the level of its 30wk moving average (currently at the 1872 level) to a test of the resistance but this has failed and the price has fallen back below support. The index is now likely drop back to the 1740 area.

Chart (3+ year) -

Chart (8+ year) -

If you have any questions or would like more information or would like to discuss market trends then do please email us at

sharehunter@btinternet.com

30/08/2010