FTSE - best January since 1989

So, the FTSE100 ends January with a performance of over 6% for the month, the best for over 20 years. The FTSE250 has also been going well, even though it reflects more closely the UK economy and much of the economic news for the last month or so hasn't been that hot to perhaps justify such a move. Nevertheless, history suggests that a good start in January is often a good sign for the rest of the year as originally mentioned in this post.

Here is some further evidence;

Fidelity Worldwide Investment has analysed the performance of the FTSE 100 since it started in 1984 and found that stock markets have risen in the first month of the year in 17 out of 29 years, with this year likely to make it 18 out of 30.

Most interesting for investors is the fact that in all but three of the 17 years equity markets have continued to grow in the 11 months following a positive January, suggesting that there really might be something to the January Effect. 14 out of 17 is an 82% success rate.

http://www.morningstar.co.uk/uk/news/105294/An-80-Chance-of-a-Positive-Market-in-2013.aspx

The markets will pause for breath at some stage and perhaps we are beginning to see that today, but increasingly evidence suggests that the home for all that new money that has been created may be the stock market going forward.

Dow - A look at the monthly chart

Yesterday I posted the monthly chart of the FTSE100 and the bullishness of the move up since the new year began was clear to see. Today, I post the Dow monthly chart which again shows a strong bullish case. The FTSE tends to follow the Dow, so no one should be surprised that the latter is also getting a little ahead of itself. Yesterday there was some pretty poor news concerning consumer confidence, perhaps as a result of fiscal cliff jitters in December, the market shrugged it off. The Dow has a look about it that it wants to go higher, especially as 14000, a nice round number is within reach, it would be a surprise if it didn't go past it soon regardless of news. 

However, there is a risk of complacency setting in after this start to the year which could easily pull those who have been sitting on the sidelines in just when the smart money begins to sell out. A pullback has to come, just a question of when and by how much.

Dow Monthly

FTSE100 - A look at the monthly chart

The monthly chart for the FTSE100 is looking quite bullish. We have a potential breakout in progress with only a resistance point at around 6400 ahead.  Worth noting that the Bollinger Band is opening towards the upside and given that this is supported by the MACD indicator it suggests that there is plenty of room for more upside as the year goes on. The FTSE has already put on over 6% in January alone which is better than the whole of last year. While it's clear that this pace cannot be maintained, the upward trend is now looking fairly solid outside of pullbacks. While the fundamentals don't necessarily support it, it wouldn't surprise me if at some stage this year we hit 7000. The monthly chart almost looks too good

FTSE100

Video market round up for the week ending 25th January 2013

A week ending round up of the markets from Steve Briggs YouTube channel. Included this week is a look at the UK banking sector and Lloyds PLC.

Links:

Steve's YouTube site http://www.youtube.com/user/sjb5555.

Useful charts and analysis can also be found at http://www.flickr.com/photos/stevebriggspics/

Profit warnings jump

Perhaps as a timely warning that despite the euphoria in the markets since the start of the year it isn't necessarily a one way ticket, yesterday there was a report that profit warnings from UK listed companies are at the highest level since 2008.

The number of UK stock market listed companies warning over profits leapt to 86 in the fourth quarter from 68 in the previous three months, taking the total to 287 or 15% in 2012 - the highest since the credit crunch and banking sector meltdown in 2008.

http://www.independent.co.uk/news/business/news/profit-warnings-jump-to-highest-level-since-height-of-financial-crisis-8468045.html

This isn't a disaster, but reminds us to be careful and perhaps suggests that looking for key words in company reports is just as relevant now as before. This is a system that the Naked Trader, Robbie Burns talks about in his book for finding both long and short opportunities which can be quite profitable. Companies announcing a profit warning often deliver more than one, a case in point being HMV before its demise, while companies that produce a good trading statement that exceed expectations will often deliver again and again. It is always worth looking out for positive or negative trading statements ahead of results as often the trend will continue in the direction of expectations, good or bad.

FTSE250, new year, new high, can it keep going?

The FTSE250 has been going well for some time, which may come as a surprise as it is considered an index that reflects more the UK economy than the FTSE100, which does much of its business overseas. Below is the weekly chart which shows the breakout from around the 12200 mark at the end of last year and it is now heading towards 13000.

Question is, can it maintain this impressive upward momentum? You would have thought that at some stage soon there has to be a pullback at the very least and given that there is now clear daylight from the old resistance at around 12200, it can retrace several hundred points and still be bullish as resistance becomes support. All things point to any volatility in the next few months coming from the US and the debt ceiling talks which will almost inevitably go to the wire. Other than that the bulls seem to have the upper hand at the moment, but putting new money into the market now is fraught with pullback fears that could come at any time.

FTSE250 Weekly

32Red, the next Sportingbet?

Smaller companies in the gaming sector are always likely to be talked of as possible takeover targets of bigger predators looking to expand their empire, Sportingbet being one that was long put in such a category before finally accepting a bid from William Hill . For investors a takeover is never guaranteed and even if it does happen it might not yield the return that some thought possible, but one of the attractions of buying into smaller companies is that at some stage they might attract the interest of someone bigger. 32Red looks to be one of those attractive, solid smaller gaming companies which even if it doesn't attract any interest is worth investigating in its own right.

It reported fairly solid numbers this morning;

Trading in 2013 to date has been strong across the Company's products with Gross Win for the first twenty-one days in January up 15% on an exceptionally strong corresponding period in 2012 that benefitted from significant promotional activity.

Commenting on the performance, Ed Ware, CEO of 32Red, said:

"32Red has enjoyed another strong year of revenue and profit growth, driven by new player recruitment and our focus on the delivery of exceptional levels of service and entertainment to casino players.   

The Group will announce its preliminary results on Thursday, 21 March 2013.

http://www.digitallook.com/news/rns/20640312-134513/TTR-Trading_Update_html

They are expecting to deliver profits in line with market expectations for 2012 and the current P/E is 13.5, forward P/E 11.2, which for a company still experiencing considerable growth isn't too demanding. In general, its fundamentals look fairly solid based on past performance.

One to note for that March result date.