So for an index that has been falling and is now testing the level of its MA it is quite possible for it to now change direction and to rally. And that is exactly what might now happen for all of the major indices – but with the possible exception of the FTSE 100. We need the price action this week to confirm the direction change but the FTSE 250, the FTSE SmCap, the S&P 500, the Dow Jones Industrials and the Nasdaq 100 are all fallen to, and are now testing, the current level of their MAs and starting to bounce back.

The exception is the FTSE 100 which has already fallen through its MA. It has found temporary support at the important 5108 level and has managed to rally slightly – but only up to the level of its MA. In other words, if the usual result of a test of the MA level – a change in direction – occurs then the FTSE is due to fall again, not rally.

In this regard it is the FTSE that is out step with the rest of the major indices. It was only a couple of weeks ago when the FTSE led the rest of the world by falling sharply when all the other indices were reflecting an upward tendency that we suggested that it was unlikely that the FTSE was leading the way! We will not then make the same claim now as we could be a  wrong again. However, it has to be observed that with 5 other major indices suggesting that a rally may now be due the bias favours a rally for the FTSE 100 up from the 5108 support level.

The alternative scenario is that, if the FTSE is, again, showing the world’s markets the way to go then all are due for some steep falls and the FTSE itself will be due a damaging fall and, perhaps, to move into a longer term ‘bear’ trend. But, for the moment, this is the more distant scenario.

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

The current technical analysis of the-

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

ANALYSIS FOR THE PERIOD  – 17th January to  23rd January 2011 –

PLEASE NOTE: THIS REPORT IS NO LONGER UPDATED. IT HAS BEEN REPLACED BY ‘THE FTSE FORECAST’ – PRODUCED WEEKLY AND AVAILABLE ON REQUEST TO ADMIN@SHAREHUNTER.COM

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) -

The Overall Market Ratings for the both FTSE 100 and the S&P 500 are now well above the 50 median so the dominant trends of these indices are Uptrends. This means that, although there will be short-term reversals, higher values should follow. The move to above 70 is a strong confirmatory assurance that an Uptrend is confirmed as ’secure’. Below this level there will be a continuing risk of a change into a ‘Stage 3′ Distribution trend but, with the OMR over the 70 level for both the FTSE and the S&P suggests that higher values yet are to follow although as the ‘OMR’ approaches the 90 level the degree of maturity of the Uptrend will be such that the risk of a move into a ‘Stage 3′ Distribution trend increases.

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.  Please click on each chart to enlarge.

FTSE 100 -   Swung back into  a ‘Stage 2′  Uptrend (buying only but care needed) -

With the index having swung into a ‘Stage 2′  Uptrend the implication is of a continuing move up the scale. However, the index has now reached the 6050 resistance level which is likely to hold the index at or slightly below 6050 for a while. What happens after that i.e whether it can push upwards and so move towards an eventual test of the important high at 6740 or if it is going to reverse back down the scale will lergely rest with what happens on Wall Street. The real problem on the horizon is an underlying weakness shown by our ‘Momentum Indicator’. This could presage a sharp reversal although it could be a month or two before this might happen. More information on this is available from ‘The FTSE Forecast’ report.

Chart (3+ year) -

Chart (8+-year) -

FTSE 250 – In a ‘Stage 2′  Uptrend ( buying only) -

This index is moving upward towards a test of the resistance which will be found at the all-time-high value at 12280 (set in May 2007). There is a strong chance that once that has happened the index will fall back to test for support around the 11000 level again. There is a possibilty of this happening as the weakness displayed by our ‘Momentum Indicator’ is a worrying factor although it may take a month or two to filter through.

Chart(3+ year) -

Chart(8+ year) -

S&P 500 - Swung back into a ‘Stage 2′ Uptrend (buying only but care needed) –

With all 9 of our trend indicators showing as positive there is good cause for optimism for a continued run up towards the 1334/50 level area. As with the UK indices the only worry is the weakness being indicated by our ‘Momentum Indicator’; this does give cause for worry about the potential for a price reversal sometime during the next few weeks.

Chart(3+ year) -

Chart(8+ year) -

DOW JONES IND – Swung back into a ‘Stage 2′ Uptrend – (buying only but care needed) -

The index has managed to get above the resistance of the 11320 level. This is is a good sign and shows that the Uptrend should carry the index up to a test of reaiatance likely to be found at the 12236 level.  Otherwise a pullback towards the 10370 level support becomes likely. As with the other indices, the main worry now is the potential for weakness suggested by our ‘Momentum Indicator’.

Chart (3+ year) -

Chart(8+ year) -

NASDAQ 100 - In a ‘Stage 2′  Uptrend  ( buying only) -

This index’s uptrend continues to gather strength and it has now broken out above the important 2240 level. 2240 is a very significant level because it is the highest level reached (in Nov 2007) by the index after its disastrous collapse from the 4816 high in Mar.2000 to the low of 810 in Oct. 2002.  Last week saw the index move above 2240 for the first time and this signals the potential for higher prices yet – and perhaps to be quickly achieved. However, the index is now testing the strength of resistance of the 2324 level which is the 37.5% retracement of the steep 2000-02 crash. if the breakout should fail at this level then this could start a pullback which could take the price back down to the 2040 level support; otherwise, a break above 2324 could see the rise towards the 2824 level.

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

admin@sharehunter.com

16/01/2011

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