Tag Archive for 'Moving Average'

The FTSE 250 – Going Up or Down?

Published on August 4, 2010 in Education, Market Reviews and ShareHunter News. 0 Comments Tags: , , , , , , , , , , , , , , , , .

A Technical Analysis of the FTSE 250 – as at 4th August 2010

The FTSE 250 is in a consolidation mode. This could result in one of two ways. If accumulation (of stock holdings) is taking place then the index is likely to start to quicken the pace of the recent rally and so move quickly up to a test of the 10500 level and then, probably, on up to 11000.

Or, if distribution (reduction of stock holdings) is taking place (advantage of the recent rally being taken by the professional ‘in-the-know’ money) then the index is due to relapse and to fall back to the 9610 support level and then, probably, on down to the important 8888 level before support may reappear.

Of these two scenarios, the first is the more likely outcome on present signals -

(Click on the chart to enlarge).

The reasons being that the index’s 30wk MA is still slanting upwards and the index value is maintaining its position above it. Also the 13 and 34 wk exponential MAs (not shown on the chart) are still confirming the continuance of the Uptrend. Volumes are average or relatively low which indicates that not a lot of supply (selling) is coming onto the market which is a positive sign.

Conclusion: the bias is to the upside but caution is required as 10500 resistance is overhead which could send the index back down

Don’t get suckered in to this market – the FTSE could be about to change direction

Published on July 27, 2010 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , .

Let’s begin by admitting that no analytical system of the Stock Market is perfect and always 100% right. But there are some technical signals that do tend to ‘work’ more often than not and it is, therefore, worth taking note of them as and when they occur and adjusting one’s trading accordingly.

One such technical signal is when the index (or stock price) meets the level of its 30 week moving average (‘MA’); when it does the index, or share price, will often change direction at, or near, the meeting point. If the price has fallen to the MA level then, often, it will turn back upwards; if it has risen to the MA level then, often, it will reverse and fall back.

As you can see from this chart over the last few years the FTSE has changed direction each time it has met with or come close to the level of its 30 wk  moving average and it is at that level again now -

So, it would be wise to take notice of this and to hold fire on any new share purchases or long trades of the FTSE until the picture becomes clearer.

Another point to bear in mind (no pun intended) is that the FTSE is currently in a technical downtrend and within any downtrend there will often be ‘bear’ trend rallies that last for between 3 and 5 weeks. This week is the 4th week of the current rally!

The FTSE 100 – Is it going Up or Down?

Published on February 28, 2010 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , .

Last week’s efforts by the markets, and by the FTSE 100 in particular, leaves the impression that the index exhausted itself with its effort in bouncing up off of its 30wk Moving Average the week before. It is as though it felt it had done too much and used too much energy as last week’s efforts lacked any real signs of continuing strength.

An inconclusive week which, just to make life difficult, could be followed this coming week with either renewed energy and a rise up the scale or an absence of buying interest and a fall back towards another test of its (still rising) 30wk.MA.

So, it does look as though we are due for another inconclusive week of sideways movement and whipsawing tendencies as we have all experienced over the last few months (just look at the short term chart of the FTSE 250 index and note how long it has just meandered sideways).

But all of this will change, and probably soon. The market will not go sideways for ever. Our technical signals are far from fully positive, in fact there are several negative signals which hint at the growing potential for a sudden collapse of the markets.

But that will only happen if the FTSE 100 falls below the 5100 level (the equivalent for the FTSE 250 is the 8888 level) and whilst the indices stay above these level there remains the possibility of a return to upward moving share prices. But that will only become a real possibility if the S&P 500 index can get back up to, and stay above,above the 1122 level and that is not going to be easy for it to achieve as it too has a number of negative signals that suggest a sharp decline is still a danger.

So, the message remains one of ‘no change – but change coming soon’. It is a ‘Baden-Powell’ message – “Be Prepared”

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

Which Way is the Market Heading?

Published on February 11, 2010 in Uncategorized. 0 Comments Tags: , , , , , , .

The FTSE 350 stocks are a real mixed pot.

Some are in short term downtrends – but not definitive enough to trade short just yet.

Others are retracing back to the level of their 30wk MA where they should make a turn back upwards – but are not yet showing enough signs of strength for us to be able to put them forward as a buy.

Yet others, the majority, are just trading sideways; drifting with no definitive trend neither up nor down – so a trade here would be more ‘in hope’ than anything else and that certainly is no proper basis for a trade.

As an example of the influence of the market’s current volatility we had identified one ‘short’ trade this morning in the form of Dana Petroleum (dnx). It is in both short term and long term downtrend. It closed yesterday at 1008p but there it is this morning up by 3% at 1030p. That’s strength not weakness. This will probably only be short lived but this sort of volatility is not only a nuisance but also it will cause whipsawing losses if we succumb to the temptation of making the trade before we are really certain of it. We will be watching Dana.

What is both a source of confidence in the market and yet, at the same time, a source of worry that a collapse may be just around the corner, is how the indices are staying as high as they are with so much worry and concern abounding throughout the financial world. If it is not the sub-prime, it is the jobless figures; if it is not the size of UK’s sovereign debt it is a double dip recession or a downgraded credit rating; if it is not Greece it is the Euro, or Spain….and yet the FTSE index hangs in up there!!

Our FTSE Sector analysis confirms and illustrates the current underlying strength of the market. Of 35 sectors our long-term (weekly prices) trend analysis shows –

9 sectors in Stage 1 trends (Basing/accumulation trend)

22 sectors in Stage 2 trends (Uptrend)

4 sectors in Stage 3 trends (Topping trend)

And, significantly, No sector is in a Stage 4 (Downtrend).

Our major concern right now is that that “current underlying strength” may be masking an inherent and serious weakness. It is an aspect which we all need to be mindful of.