Tag Archive for 'stock market trend'

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The FTSE Has Gone Critical – Be Careful and be Aware

Published on April 12, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

The FTSE 100 index is back where it was at the very beginning of the year! It is back testing the resistance at the 6055 area that has prevented its rise over the past 3+ months. Importantly, this is the 3rd time that it has made a determined effort to breakout above and beyond the grip of this resistance.

(Click on a chart to enlarge it)

The big danger now is that the FTSE forms a third top at this level. As many of you will know, a triple top formation is very often the cause of a sharp and severe sell off so there is the possibility (no more than that yet) that the FTSE could tumble – and it could tumble all the way down to the 5400 area -

Nothing is for certain in this regards and it may well not happen but it is best to be aware and to avoid over commitment to the market at this time and until the future direction of the FTSE becomes clearer.

The point being that if a 3rd top is not made and the index manages to break above the 6090 high then, after months of sideways frustration it could go shooting upwards and pile on 200 to 300 points very quickly.

But, as we say, it is best to wait and see; the market should give ample warning of what it is going to do.

Good trading.

Alan.

Chief Analyst @ ShareHunter

Timing is Everything – Don’t Buy Shares Yet

Published on March 17, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

For a short while yesterday it began to look as though the bottom might be coming in but then the FTSE took another nosedive.

We hope that you held back from buying into the market again yesterday; trying to guess the bottom is, usually, a mugs game and leads to accumulating losses.The road to ruin is littered with people who jumped in too soon thinking that “it can’t go any lower”.

Successful investment and trading is more a matter of good timing than anything else. Yes, good stock picks are important but secondary to good timing.

Good timing, in the current situation, means watching and waiting for the bottom to be put in. And it hasn’t come in yet – so it is better to continue to hold back until it is in.

There is no chance of the market putting in a sudden rise. The chance of this happening is virtually Nil, so forget it –

(Click on a chart to enlarge it).

There is no advantage likely to be gained by going into this market right now. There is also likely to be little advantage (other than very short term (not our bag) in taking short positions as the current correction may not have much further to go.

There is potential support likely for the FTSE 100 at the 5445 level. The pace though will be set by Wall Street so we have to look at the S&P 500 (and to a lesser extent, to the DJIA) for an idea of where those indices are heading and where they may bottom out –

The S&P 500 is still in an Uptrend and is displaying no more than a standard type of bull market correction (so far!). The S&P looks to be heading down that little bit further to the support that it has to find at the 1220 level (if it doesn’t find support there then it will be really in trouble and we will take up shorting stocks) –

If support does come in at the 1220 level, or just above it, then that might coincide with the FTSE at the 5445 level, or just above it –

Once the support arrives and the bottom is put in by each index the best that we can all then hope for is for the indices to continue to rally back up towards their recent, pre collapse, highs.

Analysis of Centamin Egypt Shares

Published on March 7, 2011 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , , .

This stock is interesting some investors as a ‘buy’ prospect as a recovery play.

Our current analysis says Not! Not yet anyway. Our analysis shows this stock as an ‘avoid’ and not as a ‘buy’ in view of its current decline. The risk involved in buying now is too great as there has been no signal yet that its downturn has finished.

The following points are relevant -

1.     The stock’s dominant trend – as shown by the, now falling, 30wk MA on the weekly chart and the negative crossover of the two exponential MAs on the daily chart – is now the Downtrend so, to buy now would run counter to the dominant trend and thereby involve extra risk as the dominant trend may well yet take the price lower.

2.     The price has fallen below the 158p support level of the 25% retracement of the stock’s previous strong Uptrend (from the Oct’08 low at 22p to the Nov’10 high at 203p) and is falling towards the next level of potential support of the 50% retracement level at 112p.

3.     Although the volume/spread analysis suggests that the worst of the selling may be over there is, as yet, no firm indication that buyers are returning to the stock (and without active buying the price is not going to rise to any appreciable extent).

Weekly -

Daily -

(Click on the charts to enlarge them).

Conclusion -

The stock must stay above the 112p level in order to have any possibility of a recovery rally. (To fall below 112p would indicate the potential for a possible decline all the way down to the 67p level).

Even then, should a rally commence from above 112p, we must wait for the dominant trend to change back to an Uptrend ( to be indicated by a positive crossover of the two exponential MAs on the daily chart) as, otherwise, it will likely be just a minor reaction within the main Downtrend – which will quickly reassert itself.

Before the trend changes back to Uptrend the price is likely to pull itself back up towards the 158p level which, then, will be considered as likely to produce resistance to further increase. So, not until the 158p level has been broken to the upside should we consider this the risk element to be sufficiently reduced as to present the stock as worthy of purchase.

160p is then a suitable price to consider Centamin Egypt as a buy – based on the current situation. Much can change between now and then and re-analysis later may create a different conclusion.

A.G.Saunders    Chief Analyst,   ShareHunter.com                                                                                            7th March 2011

The FTSE and the ‘Gaddafi Correction’

Published on February 24, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , .

With the press comment about a possible $200+ barrel price and the continuing turmoil in the Middle East we thought that you might appreciate our current view as to what is likely to happen to share prices.

We still have two days of this week left before we are able to draw any definitive conclusions about where the FTSE  ‘et al’  are headed and the action of the markets so far this week can be read in two, opposing, ways; either…the market has held up remarkable well with only minor downward adjustment despite the increasingly obvious dangers to the World economy by a sustained hike in the price of oil. This suggests an underlying strength that will push the market higher once the worst is over or…..The FTSE has now fallen below the 5970 lower edge of our resistance area (5970/6055) and so is destined to fall further; this being the start of a much longer, and steeper retracement.

The FTSE 100 -

Well, we do think that there is scope for the FTSE to shed up to another 200 points, possible going down to the 5770 level before any real support for it might be found.

This would not be disastrous as it would leave the Uptrend in place as the market’s dominant trend so, in our view, it would be a mistake to become too depressed at the prospects for the market and to start shorting. The danger of starting a shorting regime now is that it would be trading against the dominant trend and would risk rising losses as/when/if the market rebounds in line with its dominant trend.

This approach will change if, after a fall towards the 5770 level on the FTSE,  it fails to rally; that would then likely signal a potential change in the dominant trend and be the signal for starting a shorting regime.

The upshot of this is to say that, with the market in a state of uncertainty, now would be the wrong time to take any definitive action. We need to let this episode ride itself out and then evaluate the result. At the moment, it looks nothing more than a short, sharp correction within an uptrending market.

Hope this helps a bit.

The FTSE 100- Its Overall Market Rating

Published on February 7, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , .

The Overall Market Rating (the ‘OMR’) represents the percentage of stocks in an index that are in Stages 1 and 2 (a potential or an actual Uptrend stages).

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) -

Index: Stage1 Stage2 Stage3 Stage4 Overall Mkt Rating (‘OMR’)
FTSE 100 17% 56% 21% 6% 73 (78)
S&P 500 14% 72% 12% 2% 86 (83)

The Overall Market Ratings for the both FTSE 100 and the S&P 500 are 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 of the Uptrend. 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.

Note, this week’s fall in the FTSE’s OMR; this follows a trend change from Stage 2 to Stage 3 of an increasing number of stocks. This could be no more than a reflection of the current sideways move of the index, on the other hand it could be the first signals of a potential change in the dominant trend.

The Stock Market in 2011

Published on January 25, 2011 in Education and Market Reviews. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , .

To add to our recent reports about the danger of a stock market crash.

The FTSE has again tested the resistance of the 6050 level and fallen back. But, as it has not fallen hard and is starting to rally it would appear that buyers are still active and wanting to put their money into shares.

There is nothing wrong with that – IF you are an ‘investor’ happy to buy and to hold no matter what state the market is in and irrespective of its vicissitudes. However, if you are unhappy about jumping in to the market and then hoping that share prices will rise then you might be better advised to take a more contrarian approach and not follow this herd as they pile into the equity markets just now.

Many seem to be ignoring, or to have forgotten about, the very real problems that continue to exist in the world; the potential for inflation in the Far East (China et al.) as well as in the UK, the continuing sovereign debt saga of several European countries, the Municipal debt problem in the US etc. etc. The point is that the only thing that seems to be driving the FTSE (and the US indices) upwards is the blind faith that these problems are being resolved and that share prices have only one way to go.

Unfortunately, neither case is true.

To these fundamental points we add our technical analysis of the market indices. We have commented on this in our regular ‘FTSE Forecast’ reports but it deserves repetition and we make the following observations -

1. The FTSE and the S&P, as representative of nearly all of the major market indices, are in a long-term ‘repetitive’ trends – by this we mean they are still within the boundaries of earlier high and low levels and, as such, they offer limited upside potential and are vulnerable to sudden reversals -

2. The US economy is in dire straits with several states (California, New Jersey and others) in severe budgetary problems that may lead to Municipal Bond defaults. Look how the S&P National Municipal Bond Fund has performed of late – it has crashed down by 50% and, if it falls below the 50% retracement support level (shown) then dire problems will follow -

3. And, despite what you may read elsewhere, “Emerging Markets” are unlikely to be a source of salvation. Not only are they likely to similarly suffer in the event of a major downmove but, in any event, they are not looking very bright in their own right. Take two by way of example, China and India.

The Shanghai Composite index is looking pretty sick -

in that it has now fallen below the potential support offered by the 25 % retracement of its big fall and is trending downwards.

And India, although looking healthier, has found resistance at 21200 level of its Nov ’08 high and is now falling down to test for support at the 75% retracement level at 18000. Should that level fail then it is likely to fall to the 14500 area.

So it is unlikely that these markets will provide much upside potential in the coming months.

4. Closer to home, the FTSE 100 has risen to and continues to test a level of major resistance (5970-6050) and the US market indices (S&P 500, DJIA and NASD 100) all have a small increase potential  before they too reach levels of potentially hard resistance.

The FTSE 100 -

The S&P 500 -

The DJIA -

Now, these levels of resistance, when they operate, will cause one of two results; either to delay the rising index and to lock it into a congestion or consolidation trend for a few weeks or, possibly, months

or, secondly, to halt the rising index and to push it back down the scale. And that is where the other underlying (fundamental) problems and uncertainties can have a major impact; with the market having turned down it only requires a major incident to erupt (terrorist attack, sovereign debt impasse, currency turbulence, poor corporate earnings….whatever) to cause the indices to start responding to gravity and to crash.

Having said all that and painted a picture of gloom and doom there is a potential brighter side – If, repeat ‘if’, the FTSE can break, and stay, above 6050 then it is likely to push on upwards towards the 6750 level of the June, July and Oct 2007 highs. Here it will find very considerable resistance and the possibility of forming a long term triple top that may then be its denouement; but before then we will all be able to make considerable profits whilst it is on its way up.

Conclusion:

If you are a ‘buy and hold’ investor holding a portfolio of shares then you could be in for a troubled and troubling time of it before you will see any real and lasting increase in portfolio values. The coming months will likely be a time for stock picking and ‘trading’ rather than portfolio holding – for the following reasons:

  1. If the markets do move into sideways consolidation or congestion trends then share prices will stagnate and only the occasional fast mover will be worthy of purchase. Should the FTSE rise to the 6750 area then this will only delay the inevitable and likely cause a more devastating eventual drop.

2.  If, on the other hand, the markets do tumble from around the 6050 area then there is no advantage to be had by just holding grimly on as prices collapse – instead trading shares to the downside (“shorting”) will be likely to bring good profits

3.  Good stock-picking and trading, rather than holding, shares will allow purchases to be made at lower prices and the commencement of the big rebound that will eventually follow a crash. The ‘buy and hold’ investor will be anxiously watching and waiting to recover, missing out on profits entirely.

Alan Saunders,

Chief Analyst,  ShareHunter.com

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!

Will the FTSE break above 6050?

Published on January 16, 2011 in Uncategorized. 0 Comments Tags: , , , , , , , , , , , , , , , , , , , , , , , , .

Last week, at the start of a new year, we took a look back at what had happened during 2010 and how that might impact upon what might happen in 2011.

Our conclusion was that the markets have potential for another 5% or so increase before the possibility of a major price retracement, possibly to the extent of -20% to – 25%, occurs perhaps in March.

And today, after another week during which the FTSE has again failed to break out above the 5970/6050 resistance area and with the other indices chipping away at that potential 5% increase, we see no reason to change that conclusion.

The FTSE 100 -

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.