Tag Archive for 'S&P'

The Stock Market – to Rally or Crash?

Published on May 16, 2010 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , .

Every one of the major market indices that we report on every week is currently testing the level of its 30wk moving average (‘MA’). Why is this worthy of comment? It is because it is a common result of a test of the MA that the index (or share price for an individual stock) changes direction.

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/

Will the FTSE go much higher?

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

The FTSE 100 moved ahead strongly last week, confirming an underlying strength.

The ‘change direction’ effect of meeting with its 30wk Moving Average continued to work for all the major indices last week and particularly for the FTSE 100.

With the S&P 500 in process of a (so far successful) test of its important support/resistance level at 1122 all looks to be well with the uptrends of the various markets.

But – and it is a worrying ‘but’ – whereas most of the technical signals for the S&P, the FTSE 100 and 250 and the Dow and Nasdaq 100 are nearly all positive we do have one worrying niggle; a signal that is just not producing the same positive vibes. It is our Momentum Indicator (“MI”).

In the past the MI has been a reliable early indicator of a looming market top and so we do take cognisance of it. Our concern is that this indicator is just not partying in anything like the same way as the indices. In fact, at present, it is travelling in a different direction when it should, if all was well, be moving in the same direction as the indices. The MI is suggesting to mus that the indices may well be putting in a top by reversing direction soon.

From the two charts below you can quickly see how both the FTSE and the S&P have moved upwards during the last week or two whereas the MI has continued to drift sideways or downwards.
FTSE + MIS&P + MI

If the markets are to continue upwards we would expect to see the MI also moving upwards. But it is refusing so to do. The indices and the MI are moving in different directions. Not a good sign.

Of course all of this could change anfd the MI join the ‘buying’ party but it could also be the case that the party is nearly over.

So, what to do?

Answer; Do not get carried away with the current level of enthusiasm and overcommit to this market. And, where you are committed, keep a close eye on your exit stop prices and keep them up to date.

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

The Potential for Another Stock Market Crash

Published on February 3, 2010 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , .

The UK and US stock markets are on a knife edge of a possible second price collapse as they are following, almost exactly, the same directional path as the Dow Jones did in its 1929-34 series of crashes.

There are so many similarities between the current moves in the FTSE and  Dow Jones with what happened in 1929-30 that is very scary. The stock market could be on the brink of a possible collapse.

ShareHunter correctly identified the end of the 4 year ‘bull’ market in May 2007 and, in June 2008 forecast the potential for a market crash, giving ample warning of the potential for the 50% collapse in the FTSE 100 index.

The FTSE is once again on the edge of a cliff: The 1929 Wall Street crash wiped 50% off share values and the 2008-09 crash has done exactly the same for the FTSE. The post-crash recovery in 1930 took prices back up to the half-way level of the collapse; the 2009-2010 recovery on the FTSE has done exactly the same.

Then in 1930 the market recovery petered out; the market crashed back by 28%. This could happen again now”.

According to the latest ShareHunter research, if the historical pattern continues to be followed by the FTSE then it is likely to crash down to the 4100 level, if not to 3500. The FTSE has turned by 7% in the last 3 weeks and could soon fall by another 20% or so.

Of course, it may not happen and the market may just blip along sideways before it makes another push upwards but it is well to be aware that there are a number of technical signals that are suggesting that UK and US share prices may take another big hit.

More detail and illustrative charts are given below in the longer blog dated 28th January.

Watch this space….