Tag Archive for 'momentum'

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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

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.

The FTSE Forecast

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

Again last week the FTSE tested the resistance of the 5974/6055 areal and again failed to break above it. This is the 6th consecutive week that the index has been testing this resistance area -

What this implies is that the index could now pull back to the 5770 level before it mounts another attack on the 5974/6055 area resistance. This would hardly be a major setback as it would simply be a normal reaction within a dominant Uptrend. With nearly all of our trend indicators still showing positive this has to be the most likely course that the FTSE will take (but please read on).

This analysis is strengthened by the fact that the other main UK and US indices are still showing positive.

However, there remains the possibility of a steeper and longer correction in the FTSE (and of the other indices) than is implied in the above analysis. There remains the possibility that Damocles is sitting up there sharpening his sword in preparation for a decisive and definitive end to hopes of an ongoing recovery and rally.

We refer here to our interpretation of the signal being given by our Momentum Indicator (‘MI’). We have referred to this several time over the past few weeks -

This begs the question as to whether this change in the FTSE’s direction is going to be the sort of short term adjustment down to the 5770 area, as suggested above, or if it is to be the start of a much steeper and longer correction with Damocles swinging his sword sometime in the next few weeks.

The answer to that question will be the 5770 level on the FTSE. If the index makes a new low on, or above, 5770 then we might expect a rally back up to the 6055 level again. But, if 5770 does not provide support and the FTSE falls below it then a significant drop will be in the offing, possibly down to the 5000 area.

The FTSE – A Coming Crash??

Published on January 19, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , .

ne of our members has posed a seriously good question in response to our comment this morning about holding back from making new ‘long’ trades. He writes -

……if “the big one” is so imminent wouldn’t it be better just to get out completely ? and wait until things calm down.

Are you absolutely sure there will be a big correction ?…..

You may be thinking the same so here is our reply  –

A fair question. No, we am not sure that there will be a big one….but the occasional signal is there and so, whilst it persists, there remains the possibility. We cannot say that it is a probability.

All of our trend indicators still show that the markets are in uptrend and so it would be contrary to our strategy to close out current long trades just because one indicator is suggesting that a biggish fall is possible. We must follow the dominant trend.

With the liklihood of a reaction in the near future (be it large or small) it just seems to make good sense from increasing the amount that we are putting at risk until either the pull back happens or until we get different signals suggesting the extension of the current uptrend.

6050 is continuing to hold the FTSE back from increasing and what is going to happen is that either it causes the FTSE to fall back or, if 6050 is left behind, the index will likely continue to climb higher.

What is making us so ‘twitchy’ is that our Momentum Indicator is continuing to drift lower despite the indices (UK and US) rising. This will have to change, one way or the other. Our problem is that, historically, there can be months before the falling Indicator has an effect – but it can then be dramatic!

Good Trading Practice

Published on January 10, 2011 in Education. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , .

During the past year we have, inevitably, lost a few members who have cancelled their subscription to ShareHunter because they have lost money following our trading alerts. Losses can rack up for those who are unlucky enough to join when the market is in the early stages of a sideways move and preparing to make a change in its dominant trend. We will always suffer whipsawing trades in such circumstances – but the trading history shows that these early losses can be recovered and the account moved into profit by sticking with the strategy as profitable trades inevitably follow as the new market trend gains momentum.

But the main cause of trading losses seems to be that the traders concerned have not followed the recommended ShareHunter strategy and have been making the commonest of mistakes. On enquiry we have found that the main reason why a trader will lose money is that he or she is working on intuition and hope rather than following a specific strategy as outlined in our recommended trading ‘Rules’.

The commonest mistakes made are -

1. Insufficient attention to risk; traders will often take dangerously large positions relative to the size of their available trading capital. Added to which is the overriding expectation of profits rather than the potential for, and effect of, loss.

2. In a downtrending market – always trying to guess the bottom and, therefore, buying too soon. (At ShareHunter we contend that some of the most expensive words in the English language are “it can’t go any lower”!).

3. In an uptrending market or stock – impatience; taking a profit too early into the price rise thereby cutting short your profit when you need the larger profit runs to offset the accumulation of losing trades. And this is compounded by

4. An inability to admit to a wrong decision (to buy) by holding on to a losing trade and letting it reach ‘pain’ proportions before closing out.

These, and other, poor trading practices are obviated when following the ShareHunter Trading Strategy as provided in our Trading ‘Rules’. For the protection of your trading capital, your potential for making profits and for your peace of mind we do commend them to you and suggest that you closely follow them.

A 150% Increase – with More to Come

Published on December 31, 2010 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

We all know that past performance is not necessarily a good guide to future performance particularly when dealing in stocks and shares and also when 2011 may be a darn site trickier than 2010 was for trading shares and for holding a portfolio of shares.

The ShareHunter ‘Trader’ performance is a direct result of the investment strategy that we provide for all subscribers; the strategy itself is the culmination of many years of trading experience – and it works, allowing profits to roll , capital to be largely protected and to avoid the big losers.

Starting from the 1st July 2009 the illustrative track record of all of the ‘Trader’ trades, called in FTSE 350 stocks and based on the ShareHunter trading Strategy, is today showing a remarkable 150% increase in capital (gross, excluding trading costs) – and, despite today’s disappointing fall in the FTSE (down 71 points), this total will increase further as 15 out of the current 18 open trades have stops that are at or above the entry price.

No surprise perhaps that our chief analyst, Alan Saunders, was voted Runner-up Research Analysts of the Year in the Daily Telegraph Wealth Awards 2010!

You should not make any decision based solely on past performance, share prices go down as well as up. But the fact that there are tough times ahead is the very reason why, we suggest, that you should consider using the ShareHunter service. Not only might it help you to make good money in the coming months (and have some fun doing it) but also it should help you avoid the pitfalls and problems commonly experienced by many, if not most, investors and to protect the majority of your capital. Our subscribers did not get caught out when Royal Bank of Scotland fell by over 90% – nor in any of the other frights of the last few years and neither will they, or you if you are with us, get caught by similar tales of woe in 2011/12.

The ShareHunter ‘Trader’ service only requires your attention for about 5 minutes around 8.30 am. (to check and change Stop price orders) and about 15 minutes around 11.00am (to consider and decide upon the trades suggested that day). It is suitable for both Spread Betting and for CFD accounts.

2011 could be a year in which many people will lose a lot of money on the stock market. Please don’t be one of them. Joining ShareHunter could be the way to both profit and protect.

With good wishes for the coming year,

Alan

@ShareHunter

The FTSE could collapse in early 2011

Published on December 20, 2010 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , , , , , , , .

The FTSE put in another positive week last week but, despite its growing strength and confidence, it still has not managed to breakout above the resistance of the 5800/5900 area.

The FTSE 100 – Click on the chart to enlarge.

If it can haul itself up above, and stay above, the 5900 level (the May ’10 high) then there is still a chance that it will hit the 6050 level by Christmas.

But our main worry this week is the danger signal being offered by our ‘Momentum Indicator’. Last week we commented that our Momentum Indicator (MI) was still showing as rather less than supportive of the FTSE’s recent climb. This week our concern has grown as the weakness displayed by the MI has increased -

Click on the chart to enlarge.

It is immediately obvious from the above chart that the FTSE has moved upwards during December without any support at all from the MI. This is likely to cause the FTSE to fall back again unless the MI shows a reversal and an increase next week.

Previous weakness indications of the kind we are now seeing from the MI have been followed by retracements of between 20% and 25% from the high.

Now, we cannot say that this is going to happen. It may not. Our MI is not an infallible messenger. And we cannot point to any accurate timing even if it is about to happen; it could be next month or up to six months before the rot sets in. But it is well to be aware that there is an underlying weakness to the FTSE – as well as to Wall Street.

The FTSE 100 – Where to Next?

Published on November 8, 2010 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

Last week the FTSE managed to close above 5770 (at 5875) after quite a strong performance over the week. So what is now needed is for the index to close this coming week at or above 5875.

If it can do that then there is no doubt that it is on its way up to the 5970/6050 area (where it is likely to meet more resistance).

The fact that the FTSE will have re-entered a ‘Stage2’ Uptrend with a strong close at the end of this week means that the 5970/6050 resistance area may not cause anything more serious than a short term sideways move before the index continues to rise up the scale. And that means that the FTSE could be on its way up towards an eventual test of the resistance created by the all-time-high of 6750 created in June, July and October 2007.

But, there is a deal of resistance to overcome before we can look forward to that. And we continue with our worry that the current rally is not receiving sufficient ‘pit-prop’ support to sustain it.

Both the FTSE and the S&P 500 indices are failing to achieve much apparent support from the Momentum Indicator and this is a worrying feature. Note how the recent rises on both indices is not matched by anything like the same rise on the MI. The MI is a longer term indicator and it can take some months before its signals have an effect – so you might understand our concern that not everything in the stock market’s garden is pointing to the sunny uplands -

and that there is a risk of a sharp, and possibly severe, correction building, unseen in the background. So don’t get carried away with the upside potential of this stock market. Not yet anyway.

Where is the FTSE Heading – Up or Down?

Published on October 27, 2010 in Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , .

The current rally has taken the index up to another test of the 5770 level. The 5770 level is again producing resistance and, if this is maintained, it could have a detrimental impact on the current (short-term) Uptrend and could, at worst, push the index back down towards another test for support at the 5010/5190 area.

However, the strength inherent in the current rally is such as to suggest that there might only be a short retracement before the index resumes its upwards path and moves up towards a test of the 6060 resistance level area.

IF the FTSE can get, and stay, above the 5770 level it will have moved back into a ‘Stage 2′ Uptrend with the implication then being that a continuing move up the scale could take the index well beyond the 6000 level.

However, it may not happen. There is one niggling worry that we can see and that is a possible negative interpretation of our Momentum Indicator (‘MI’):

Our ‘MI’ is useful for indicating potential highs on the market (it’s not so good at the lows) and that is what it is currently hinting at – that the 5770 level may, once again, become a top of the market for a while. Note how the FTSE has been running up the scale over the past few months whilst the ‘MI’  has moved sideways with only a very jaundiced attempt at rising in similar proportion to the index.

Now, this is not an infallible indicator and can mislead at times but its lack of increase over the last few months does, at least, sound a warning bell for us to be careful and not to go overboard long of the market.

For the FTSE 100 – 5770 continues as the  key level for now; it may hold the index back for a while – it may push it down in a hard, costly, move back to the 5100 area – or it may be a nothing level and allow the index to jump through and on up quickly to the 6060 area.

What is Happening on the Stock Market?

Published on January 17, 2010 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , .

Last week the FTSE 100 closed 78 points (-1.4%) down. Hardly dramatic. Our trend analysis shows that the Uptrend is still in place and so higher prices are likely to re-assert themselves soon. It may not be during this coming week though as our Momentum Indicator is suggesting that there may be insufficient buying activity to lift the markets in the short term.

From the date (March 2009) that the stock market bottomed out the pattern of the FTSE 100 index has been a ‘wave flow’ of 1 to 4 weeks of higher closes followed by 1 to 2 weeks of lower closes. So last week’s small correction is just part of that pattern and this week we may see a perfectly normal extension of that correction before the index turns upward again – which we, calculate, should be the following week.

But, if that doesn’t happen then the wave-flow pattern will have changed and that could signify an imminent change in the dominant trend and be something to be very wary about. But that is a week or two away yet and, of course, may not happen at all. For the time being it is a matter of being prudent and not over committing to the market but also of being ready to take full advantage if, as expected, the market rallies later this coming week or during the following week.

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