The ShareHunter Analysis Saw the Risk of a Big FTSE Fall

Published on July 12, 2011 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The opening two paragraphs of this weekend’s ‘FTSE Forecast’ Report, sent to all ShareHunter subscribers, warned of the danger of a big fall.

The ‘FTSE Forecast’ Report is summarised below – But don’t you think that it would be a good idea to keep yourself properly informed on where the FTSE is heading? You can subscribe for the weekly ‘FTSE Forecast’ and do just that. It is only £12 a month or, of course, you can subscribe for the full ShareHunter Alerts service and get up-to-the-minute top UK and US share tips plus daily stop-loss and profit-protection service. And the ‘FTSE Forecast’ then comes free.

You can join for the full service now by going to our Home page or you can just subscribe for the ‘FTSE Forecast’ by using this link -

https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=8NCBVH3W6UPCE

The ‘ FTSE Forecast’ Report on 10th July 2011 (extracts) -

The strength that the FTSE 100 showed the week before last ebbed away last week and left the FTSE 100 index with a ‘Gravestone Doji’ candlestick. This is normally interpreted as a bearish signal indicating a top reversal and, as the high of the week reached the heavy resistance area at 6055/6090, the creation of a new top has to be considered as a serious possibility.

It could also have serious consequences because, if a top does form, it would be the 4th top and the resulting fall could, therefore, approach being fast and furious -

FTSE 100 Weekly price chart -

Unfortunately, the FTSE 250 is not in a position to help clarify the situation. As expected, it has risen to test the strength of the resistance created by its May 2007 all-time-high value at 12236. From there last week it fell back to create a ‘shooting star’ candlestick pattern which is also normally interpreted as a bearish signal. But, again, conformation from the following (i.e. next) week is required for accurate interpretation

FTSE 250 weekly price chart -

There is not much help, strength or support coming from Wall Street either. The S&P 500 is finding the grip of the 1334/1350 resistance area too strong to escape from and, last week, it too gave a signal indicating the frustration and indecision existing in the market -

S&P 500 weekly price chart -

And, frankly, it is not really worth looking elsewhere in the World for opportunity just now. Much is written about the potential offered by the likes of Japan and, particularly, the emerging economies of China and India. Well, their major market indices are not looking very bright at all and, currently, do not even offer anything like the same degree of short term growth potential that is/might be available from the FTSE and S&P if those two indices manage an upwards breakout from the overhead resistance areas -………continued

NORTHUMBRIAN WATER GRP – ShareHunter’s Technical Analysis “saw” the Chinese coming!

Published on June 28, 2011 in Education and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , , , .

On Monday morning we sent out a ‘buy’ alert on Northumbrian Water Grp (NWG). Of course we didn’t know that a bid was being mounted but we commented ” …the price has broken above the 376p resistance of the stock’s Jan’08 all-time-high price and so is now in virgin territory and, therefore, likely to move up quickly at first; particularly as the breakout has been achieved on increased volume indicating that there are willing buyers for any increase in supply…” . In other words, our reading of the chart showed that something was likely to happen – here is the chart at the time of our alert -

(click on chart to enlarge)

And here it is a few hours later (after we bought at 388p!!) -

This is just another example of how experienced technical analysis can help to create profitable trading.

Why not subscribe to ShareHunter and join the party?

The Importance of the Trend of the FTSE

Published on June 21, 2011 in Education and Market Reviews. 1 Comment Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

Many investors and traders make the mistake of looking at yesterday’s market action to try and get an idea of how it will move today or tomorrow. This is far too short a time frame. We zoom out and look at the long term (weekly) trends as these are the dominant trends that will dictate the overall direction that the market will follow for weeks or months and sometimes years ahead – with all of the daily vacillations being ‘noise’ and impossible to accurately read.

That is why we learned to use the ‘satellite approach’ to look down on the longer term dominant trends to establish how best to structure a current investment strategy.

Looking back over the last 13 years history of the FTSE 100 it has entered a ‘Stage 3’ Topping (or Distribution) trend a total of 6 times. The results have not, though, always been the same. Given that a ‘Stage 3’ trend can only set in after a ‘Stage 2’ Uptrend the danger to be aware of is that the ‘Stage 3’ trend itself is likely to be followed by a ‘Stage 4’ Downtrend but, and as can be seen from the chart below, that seems to depend on the strength and length of the preceding ‘Stage 2’ Uptrend -

( Click on the chart to enlarge it)

Working from left to right we can see that the first ‘Stage 3’ period persisted from June 1999 to Sep 2001, a total of some 27 months as the long Uptrend exhausted itself before it morphed into a strong ‘Stage 4’ Downtrend. Then, following the swing into a ‘Stage 2’ Uptrend after the March 203 bottom, the next two ‘Stage 3’s were comparatively short and were followed by a return to the (unfinished) Uptrend. The next topping ‘Stage 3’ trend occurred after the Uptrend had become exhausted and it ran from July 2007 to July 2008 before it too morphed into a another steep ‘Stage 4’ Downtrend.

The 2010 ‘Stage 3’ trend was followed by another Up leg and so the question now hangs there – will the 2011 ‘Stage 3’ be followed by another Up leg or by a swing into a ‘Stage 4’ Downtrend?

To answer that question, at least temporarily, we look to the various technical signals; these do still indicate that the balance of probability is that the 2011 ‘Stage 3’ trend will be followed by a return to the Uptrend.

Of course, this cannot be guaranteed but it is going to be relatively easy to read because a break back above the 30wk Moving Average will be the first signal of a return to the Uptrend; whereas a new top forming at or below the 30 wk MA will be the first strong signal of an impending ‘Stage 4’ Downtrend.

A brief look across to Wall Street shows that the trend of the mighty S&P 500 might be swinging into the start of a ‘Stage 3’ trend although it is too early yet to be able to be definitive.

A look back over the last 13 years of the S&P 500 shows a similar picture to that presented by the FTSE 100 – that the longer ‘Stage 3’ trends tend to be followed by sharp, lengthy, ‘Stage 4’ Downtrends whereas the shorter ‘Stage 3’ periods tend to return to the dominant ‘Stage 2’ Uptrend -

Most people, respected market commentators included, tend to think that there are only two trends – Up and Down – and that any market move that does not fit into them is ‘trendless’. Wrong! There are 4 distinct trends with ‘Stage 1’ (Accumulation) trend and ‘Stage 3’ (Topping) trend being powerful technical indicators in their own right.

A ‘Stage 3’ Topping trend tends to reflect not just the balancing effect of the buying and selling activities of the ‘bulls’ and ‘bears’ but, particularly, it reflects the nervous environment prior to the market making a definitive move, up or down and, as commented above, the technical signals given towards the end of a ‘Stage 3’ trend will tend to be reliable indicators the likely future direction of the index.

At the moment the, so far short, ‘Stage 3’ trend of the FTSE 100 looks likely to be followed by a further up move – but please don’t put the children’s inheritance on it as it could change very quickly, such can be the market volatility during a ‘Stage 3’ Topping trend.

When Will the Stock Market Correction End?

Published on June 13, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

Soon is the quick answer.

A full, free, technical analysis report giving support levels etc. is available on request to admin@sharehunter.com

This Stock Market correction will lead to a significant rally but there may be more falls to come first so don’t be in a hurry to start buying – but be ready because there are going to be some bargains to be had and some fast profits to be made.

There is Support for the FTSE 100 at 5770 So a Rally is Due Soon…

Published on June 13, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The FTSE 100 is sitting above potential support in the form of the 5770 level and the 5720 level – being the ‘standard’ support of the -6.25% from the  recent run of highs at the 6100 area; there is also the 5594 level a bit lower which should provide support if needed as it is a standard support level of -8.33% from the highs which has already provided support once, back in March -

(click on chart to enlarge it)

The FTSE 100 is at a point of decision. It is swinging into a ‘Stage 3’ Topping Trend as the 2010 (‘Stage 2’) Uptrend has lost its momentum.

Although a ‘Stage 3’ trend is usually followed by a ‘Stage 4’ Downtrend it is not always the case and it can be that the index will yet break out to the upside again beginning another ‘Stage 2’ up leg. There is still time for it to do this before a proper ‘Stage 4’ Downtrend appears.

The current ‘Stage 3’ trend is shown on the chart below (the shaded area) together with the previous two ‘Stage 3’ trends in the last 5 years; one followed by a (long) Downtrend and the other by a further ‘Stage 2’ up leg -

The FTSE 100, weekly prices -

With the potential support at 5770 and 5720 there is some cause for optimism that this ‘Stage 3’ trend might not morph into a full blown ‘Stage 4’ Downtrend but rather return for a second leg Uptrend.

Another plus factor is that the rest of the UK market is continuing to move within a ‘Stage 2’ Uptrend with no signs (yet anyway) of swinging into a ‘Stage 3’ trend. It has to be observed though that the FTSE 250 index does have potentially strong resistance just above its present position in the form of its all-time-high price at 12236 -

The rest of the analysis, which includes the S&P 500 and the DJIA, is available on request to admin@sharehunter.com

When Will The FTSE Break Above 6100? – Take Part in a £5 Sweepstake

Published on June 5, 2011 in Uncategorized. 0 Comments

By way of a little light relief we are running a sweepstake on when the FTSE 100 will breakout above 6100.

It is open to all and I do hope that you will take part. There is no catch and no ulterior motive, just a bit of fun and the more who take part the merrier it should be.

The competition is simple. It is to guess what day will be the third consecutive day that the FTSE 100 index closes above 6100 (we have selected the 3rd day simply because one or two days might not be enough to confirm the breakout).

The donation is £5 a time (and there is no limit to the number of times you can donate) and all date selections must be ‘in’ by 5pm on Sunday the 19th June 2011. The winner will receive the total in the kitty (which will be the total of all of the £5 donations less only the Paypal charge of 3.4%); if there is more than one winner then the pot will be shared eaqually. ShareHunter will not make anything from this sweepstake, it is just a bit of fun. You could win a substantial sum or have it donated to a charity of your choice.

So, whether you think that 6100 on the FTSE 100 will be achieved this month, this year or not for a decade(!) do take part and enter your date(s).

Please use this link  to Paypal –

https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=SLVNK2NTACSKU

for each time you want to make a £5 guess. No other advice is necessary as Paypal will provide us with a record of your choice of date(s) and your email address and we will, of course, acknowledge your participation.

Let’s have a bit of light relief and good luck…

The ShareHunter Team

The FTSE – Is It About to Tumble?

Published on June 5, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The FTSE is still in the grip of the 5974/6055 area of resistance and is close to losing the support of its 30wk Moving Average.

It is not looking too promising. Much now depends on the coming week and whether or not the FTSE can pull itself back above, or at least to, the level of its 30wk Moving Average (which is currently at 5923) -

(Click on chart to enlarge it)

The signal being given by its fall below its 30wk MA – combined with the sideways move over the last 21 weeks  (yes, it’s that long) – is that the index could be in process of a swing into a ‘Stage 3’ Distribution (or ‘Topping’) trend.

The significance of this is that a ‘Stage 3’ trend is usually a pre-curser to a swing into a ‘Stage 4’ Downtrend. Added to which the Triple Top formation can be clearly identified which, of itself, can lead to a steep, sometimes fast, decline.

A reminder of the 4 Stages in which the market moves -

So, the poor old FTSE is not promising much at all although there is time yet, just, for it to recover and rally back above its 30wk MA. There are occasions when a ‘Stage 3’ trend is followed by a return to a ‘Stage 2 Uptrend (although these are far fewer than a swing into a Downtrending ‘Stage 4’).

And there are some positive signs elsewhere that might have a beneficial influence on the FTSE and help it to recover or, at least, to avoid a collapse. These are detailed in the latest ‘FTSE Forecast’ Report which is available on request to admin@sharehunter.com

Is it Right Time to Invest in the Indian Economy?

Published on June 1, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , .

Not yet is the immediate answer;

JP Morgan Fleming Indian Trust (JII-l) is one way to invest to benefit form the growth in the Indian economy via the UK stock Market -

(Click on the chart to enlarge)

The price has retraced by a ‘standard’ -33.33% of the length of its bull run up from the 175p low to the 505p high so it is testing support provided by that 395p level at the moment. But our concern is that it has swung into downtrend (see chart below) and this could, therefore, cause the price to break below the support and carry on falling. Before we can consider it as a buy we need to see it bounce off of the 395p area and, preferably, form a new and higher low and, particularly, for the two Exponential Moving Averages shown on the daily price chart below to have crossed over again.This would indicate a swing back into Uptrend which needs to take place before a ‘buy’ should be considered.

For confirmation we only have to look at the Indian stock Market; here is the Indian BSE 30 Index -

This shows a number of Downtrending signals. Particularly we would suggest waiting until there are more positive signals that you are likely to make money by investing into this market ( to do otherwise is just a gamble where you will ‘hope’ that the market goes up rather than being certain that it will once the ‘bull’ signals show.

These ‘bull’ signals include – the 30wk Moving average (the continuous red line in the above chart) should have turned back upwards; the price of the index needs to be above, not below, the moving average and the price needs to have broken out above the downtrend line of the ‘pennant’.

So, we suggest that you keep you (curry!) powder dry for the time being and not to take unnecessary risks by jumping the gun.

Hope this helps.

Weekly price chart -

The FTSE – Going Burn or Bounce?

Published on May 31, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The FTSE remains in the grip of the 5974/6055 area of resistance and is being supported by its 30wk moving average -

The FTSE 100 , weekly price chart - (Click on the chart to enlarge it)

Its underlying dominant trend is still the Uptrend so the bias is in favour of a move back up to the top of the resistance are at around 2090 but there remains the possibility of a sudden trend change if the Triple Top formation asserts its influence for a sharp correction -

We have previously drawn attention to the possibility of a 5th attempt at a breakout above the 6055 area resistance and we do so again this week as the pattern of the last three days could imply that a 5th attempt might (no stronger than ‘might’) be under weigh. NB. 5th attempts are usually successful (although not invariably so) and are also usually followed by a fast move in the direction of the breakout (or in the opposite direction if the attempt fails) -

The better news is that our ‘Momentum Indicator’(“MI”) is now slightly less worrying than it has been over recent weeks. What had been happening was that the MI, which would normally lead the index, was sloping downwards whilst the index was sloping upwards – a situation pregnant with the potential for a sharp reversal on the index. Now, however, the situation is less potentially dramatic as the MI is moving sideways suggesting that the index could rally again or, at least, refrain from a steep decline -

Conclusion: The FTSE is ‘hanging in there’; the trend indications are that it should rally up to test the 6055/6090 area again and that it should, at some point soon, break out above it. However, there remains the possibility of a sudden trend change and a sharp reversal so full commitment to this market at the present time is, perhaps, inadvisable.

Sell in May and Go Away? – No Way!!

Published on May 3, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The old adage is well past its sell-by date as the nature of the stock market has changed, almost out of recognition, from the time that the saying was accepted as sensible; now with 24 hour markets and with internet trading and second by second arbitrage it really just doesn’t reflect of the realities of 21st Century investing.

Then, particularly, why sell and go away when the FTSE might be about to offer a big potential bonus.  At first sight this may not appear possible as the FTSE can be seen to be in danger of forming a triple top formation (from which it may crash). This is readily seen from the weekly price chart -

(Click on the chart to enlarge it)

But, in fact, the FTSE 100 is at an ‘Either-Or’ juncture (Either it is going to break upwards Or it is going to crash back).  What we now have is the picture of the FTSE showing the potential either for a triple top forming or for the alternative of a 4th attempt at a breakout above the 4 month-long resistance area (and 4th attempts are usually followed by a fast move!).

The daily price chart clearly shows how an “either -or” situation is at hand -

So, either the FTSE is going to burst upwards and give us all a glorious summer (the breakout could be followed by a fast upmove of several hundreds of points) or it is going to fail again and be liable to succumb to the usual reaction to a 3rd top which is to drop like a stone!

Daily prices are notoriously volatile and really do not always show the strength of the dominant trend and that is why we turn to the Weekly price chart to identify the main trend and the likely forward movement of the FTSE that it signals to us. Added to that is the analysis of what is happening on Wall Street as that will usually lead the way for the FTSE to follow.

All this information, and more, is available from the weekly ‘FTSE Forecast’ Report from Sharehunter.