It is this sort of practical and straight forward analysis that has helped us and the ShareHunter subscribers not just to position themselves correctly and to make money by trading with the dominant trend but also, and so importantly, to avoid losing large chunks of their investment capital by avoiding the sudden downturns in share prices.

Here, by way of example, area  few extracts from The ‘FTSE Forecast’ during 2011 so far -

1. 31st Jan  – “…if the 5770 level holds then the FTSE will rise to 6055 again but if it fails then the FTSE will fall to 5000…”

2. 13th Feb – “…Our special ‘Momentum Indicator’ is continuing to point towards a coming sharp fall on the markets…”

3. 13th Mar – “…The signals presented bu our ‘Momentum Indicator’ show a disturbing divergence for the FTSE (even more pronounced for the S&P 500); something just isn’t right and we all need to be watchful (for a crash)!…”

4. 25th Apr – “…A triple Top is forming – this could lead to a sharp downturn in the FTSE….”

5. 2nd May – “…The FTSE is at an important ‘Either/Or’ juncture – Either it is going to break upwards OR it is going to crash…”

6. 5th Jun – “…The FTSE is finely balanced and could soon start an extensive decline…”

7. 19th Jul – “…Do not be tempted to buy shares now. A Painful time is now due to follow. A fall is approaching and it could be fast and furious….”

8. 15th Aug – “…The markets are building towards a decisive downmove…”

9. 4th Sep – “…Share prices are likely to fall again – and will take the FTSE down to the 4782 area…” (NB. the FTSE fell to 4791 on the 8th Sept!!!)

And, for Autumn/Winter 2011 – “…The FTSE will fall again to the 4782 area and then likely crash as far as the 3500 level”

ShareHunter’s ‘Trend Analysis’ is unique and our forecasts have a high degree of accuracy allowing our subscribers to enjoy successful investment opportunities – in falling as well as rising markets.

Join us!

The award is determined by public vote and we would like to thank all of our subscribers who voted for Alan.

He continues to provide weekly experienced insights into the FTSE movements and to analyse where it is likely to go next.

The closest historical comparison to the current situation is the collapse and subsequent recovery of the FT 30 index back in the 1970’s when there was a similar dire national economic scene and deep recession.

Let us look at the (worrying) similarities that existed then and now. Here is the 1970’s picture -

(click on charts to enlarge).

And here is the current picture -

The first thing that strikes one is the similarity in the pattern of the stock market despite the gap of 40 years. The second thing of note is that the collapse in 2007-09 (at -49%) has not been anything like as serious as the collapse in 1972-74 (at -73%) but then the recovery rally has not reached anything like the same proportion either; +62% so far in 2009-2010 compared with + 153% for the first tranche recovery in 1975.

The important thing though is to ask if the pattern of the FTSE 100 over the last few years, being so similar to its predecessor in the 1970’s , is likely to continue to follow a similar path. This is important because, as can be seen from the FT 30 chart, the recovery rally finally ran out of steam after increasing by +192% from the Jan.’75 low (at 144). The in-ratio equivalent for the FTSE 100 now would be +78%. This suggests that, if the pattern continues to mirror the 1970’s then the FTSE 100 could be set up to reach the 6160 level ( + 78% from the 3460 March’09 low) before any serious correction occurs. In 1976 the correction was a big one and took the index back down to the 50% Retracement level of the recovery rally and this would indicate a correction  for the FTSE 100 down to the 4810 level; being the 50% Retracement of the 2009-2010 recovery rally IF the index does reach as high as 6160.

But there is a lot of doubt that the FTSE 100 can make it that high. It is some 520 points, 9%, higher than today’s close ( at 5640) and there is a deal of technical resistance (at the 5770 and 5930 levels) that would have to be overcome for this to be possible. In addition, there is the message being broadcast to us by our proprietary ‘Momentum Indicator’ (‘MI’). This indicator has a good history of identifying potential and actual market tops (although sometimes many weeks ahead of the actual event). It is indicating to us now a potential for a new market top. Whether this will be but a short lived correction or ‘the big one’ we cannot yet say although the continuation of the pattern similarities between now and the 70’s does suggest that it would pay us all to be aware of the potential for a sharp correction

Below is a chart of the FTSE 100 and, below it, the Momentum Indicator -

To support a rising market and one that is likely to keep rising we would expect the MI to follow a similarly upwards moving path to the index itself. But here, you will note, the FTSE 100 has been rising quite steeply whilst the MI has been meandering along sideways. Not a healthy sign.

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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