FTSE100, oversold bounce due?

The big news this week will probably come when the Fed meets and concludes on Wednesday. Much of the current uncertainty came about when Ben Bernanke talked about the tapering of QE and that it could possibly end sooner as against later. The market seemed to take this as a signal that it would end quickly, all in one go and that it was as good an excuse as any to sell off. If anything the sell off in equities has been stronger outside the US, the UK getting to around 6900 before the latest fall to 6300. It's believed that Bernanke will basically say the same as before, but for the benefit of the trader panic types, it will be made a little clearer on what is likely to happen.

“We suspect that this week Bernanke will continue to say tapering will happen at some point, could happen this year but will be data-dependent, and that we are still a long way off from removing the very easy policy stance the Fed has in place,” said Jim Reid, strategist at Deutsche Bank.

“We still think that the Fed will struggle to taper very much and very early, but the debate is now going to be around for a while,” said Reid.

http://www.marketwatch.com/story/stock-futures-up-sharply-on-fed-clarity-hopes-2013-06-17?link=MW_popular

In other words, same as before, data dependent and nothing likely to happen until the "recovery" is fully in place. Even then it likely will be a slow winding down, gradual, over time. What they will not do is turn it off totally on a specific date.

Whether this relaxes the markets is anyone's guess, but the FTSE100 is showing that it is ready for a bounce after the recent fall. The Daily chart looks set to retrace some of the lost ground of the last month, but would probably need to go through 6600 and then use that as support if recent highs are to be challenged again. If it fails to get to 6600 and it becomes resistance then we could see a second wave down that confirms a downtrend.  The 20dma is just touching the 50dma to a potential downside crossover on daily chart. Weekly chart is also weaker, but the monthly still gives hope to the bull case.

Charts below;

FTSE100, bull run over or just pausing for breath?

So, we ended the week with it feeling a little like the old volatile times of not so long ago, a little complaceny being shaken off. The market seems to have turned its attention back to worry about macro issues and some old fears seemed to resurface. Does this mean the current bull run is over? A look at the charts would suggest no, at least not until some serious damage is done to the longer term weekly and monthly charts.

Below are the FTSE100 daily, weekly and monthly charts. The daily is bearish, the latest move down putting a dent in the previous bullish mood. However, one look at the weekly chart shows it still has a little way to go before the bullish trend can be said to be over. MACD is just turning negative, but is some way off the zero line, it could easily turn back up again. The Monthly chart is still positively bullish, MACD still looks quite strong. The monthly chart does give some hope to bears in that the latest candle with a long upper shadow is negative and bearish.

A long upper shadow indicates that the Bulls controlled the ball for part of the game, but lost control by the end and the Bears made an impressive comeback.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:introduction_to_candlesticks

Worth noting however, that price had been outside the rising Bollinger Band on the Monthly chart and has now fallen back within it. Price had effectively got ahead of itself and once this happens it is not unusual to see it fall back inside the band. The Bollinger Band is still positive.

All to play for next week, the FTSE currently called to be down around 50 when the markets open on Monday.

Daily, weekly and monthly charts below.

FTSE100 Update - Bull run continues

FTSE100 continues to go up with every brief dip being bought. Both the daily and weekly charts look bullish. On the daily chart we have just had a new 20/50 dma crossover to the upside, the same crossover on the weekly chart having been positive for some time. Bollinger Band has opened towards the upside and while the MACD is slightly extended on the daily chart it is only just crossing on the weekly chart. This suggests that even if we get a pullback on the daily, the trend remains bullish as long as the weekly MACD trends up. Certainly no sign of Sell in May so far.

Click to see charts below.

The Week Ahead 2 - 22nd to 26th April 2013

The week ahead.

Data:

22nd April 

EU Consumer Confidence Indicator 

23rd April 

US House Price Index 
US New Homes Sales 

25th April 

UK GDP (Preliminary) 
US Bloomberg Consumer Confidence
US Continuing Claims   
US Initial Jobless Claims 

26th April 

US GDP (Advance)  
EU M3 Money Supply  
US Personal Consumption Expenditures, Income, Spending  
US U. of Michigan Confidence 

Company Announcements

24th April 

Finals - Home Retail Group. Been going well recently but the fundamentals are looking quite generous for a retailer. Will be interesting to see what effect if any the March/April winter weather has had on business. Note - my mistake this result is due next week.

Finals - Brown N Group. I first mentioned Brown in this post, Retailers Under The Cosh as one to watch in the FTSE250, potential takeover target and probably undervalued. Back then it was around 242p, today 420p as of Friday's close. Be interesting to see if it can maintain this momentum once it announces its finals. Didn't give anything away back in March as to what to expect.

25th April 

Interim Management statement - Playtech. Has done well lately out of doing business with William Hill and has also recently agreed a deal with Ladbrokes.

Markets and charts

FTSE100 Update - Where next?

The direction of the FTSE100 is more negative than positive, but it is still a guessing game as to how the latest moves will ultimately play out.

Daily chart

A downtrend with two lower highs and potentially a third in play right now. The arrows on the chart show the downward direction, but also the potential for upside if that downward trend tram line is broken.

MACD is negative. Two lower highs showing divergence on the chart in Feb and March. The headshake described in my update the other day looks like it may be happening again as MACD is currently near enough to the zero line to give bulls fresh hope of an upward move, but could easily reverse and go further into oversold territory. It's been some time since MACD did that so it is due.

20 DMA looks like it is just about to go through 50 DMA on the downside.

Support on the chart at between 6250 and 6300 needs to hold.

Weekly chart.

Still a lot to play for

MACD is going negative, but is still some way off the zero line. We still have higher highs on the MACD.

20 and 50 DMA still holding on this chart.

Trend tram lines and support lines below suggest that on this longer time frame chart we could have a decent sell off yet still be in a general uptrend.

Overall, things look more negative and it will be interesting to see if the FTSE holds and we get consolidation between 6250 and 6500 or bigger falls below 6250. Right now there is less reason to be bullish, although if this is a bigger bear market move then it is very early stages.

Charts below:

FTSE100 Update - Finally rolling over?

A couple of days ago I posted a chart showing the FTSE100, it looked like it was ready to go up again. Indicators suggested that we might be in for an early reversal of a minor downtrend that had been in place over the previous couple of weeks. Well, it looks like we got a classic example of indicator headshake, looks like it is going one way and then suddenly reverses, the previous trend still in place.

This is something that needs to be watched out for whenever indicators look like they are reversing from an existing trend. I call it the headshake, because a little like the dummy move that defenders (put in your favorite sport here) are often sold by attackers, you can go one way and then suddenly find your foe has gone in the opposite direction. Yes, you can look like a dummy and markets behave in the same way to.

A typical example of this is the headshake that often happens in the early stages of a Bollinger Band expansion. The Bollinger Band will often, especially after a period of consolidation, open wide, the direction can be up or down. You can see on the chart below how the band opens like a bubble in places, but quite often the initial move that price is making is not the direction that price eventually goes. In other words, you might think the bands are opening to the upside because price seems to be heading that way when in fact it is going to eventually reverse after the initial move and go in the opposite direction. This why it is often important to wait for confirmation. It means you will always miss the early part of a move, but it should keep you clear of the headshake.

As for the FTSE100, the MACD has reversed, moving averages are under pressure and the Parabolic Sar didn't hold. The chart now looks negative, with the Bollinger Band opening towards the downside, unless of course what we are seeing is another headshake. Perhaps the US numbers due out later today will confirm one way or another the direction? If they don't meet market expectations, the charts are telling us we should go lower.

Chart:

FTSE100 Update - still looking positive

It must be getting boring, especially for market bears, that the charts are still looking pretty positive despite being very deep into an uptrend that seems to defy gravity. Not even North Korean talk of war threats (have they ever talked of anything other than war?) added to the Cyprus banking fiasco can shake the markets it would seem.

Price on the chart has been hovering between the 50 and 20 dma which seems to have flatlined, however, other indicators suggest that the next move may be up again. MACD is still above the zero line and after a period of decline is now heading up again. No green bars yet but the crossover is almost ready to go. This is supported by the Parabolic SAR indicator going positive with the first green dot on the chart under today's move up. That needs to hold, but if it does we should be going higher.

I do wonder if we might be heading for an ideal sell in May scenario this year?

FTSE100 - Daily

FTSE250 Update

In trading there is a saying "climbing the wall of worry", well the FTSE250 looks like it is taking baby steps up a hill of worry. Worry in the sense that at some stage traders know that there has to be a correction and as the trend gets longer there is the risk of being caught in a bigger sell off. MACD looks to be weakening, but like the FTSE100, the 250 could fall quite a lot and still be bullish overall. Given that this current trend started in mid November we are now about 5 months in to a very stretched bull move that having hit 14,000, a nice round number, put on almost 2000 points in that time. No one should be surprised if we get a little pullback from here.

FTSE250 - Daily

FTSE100 Update - Will market again buy on the dip?

FTSE100 reached the psychologically important 6500 and then sold off.  Hardly a surprise considering the recent run, chart still looks quite bullish although the MACD indicator is suggesting weakness again. The last time this happened on the daily chart we had a period of consolidation between 6300/400, before the move up to 6500. The 20 and 50 dma still looks quite positive and I would look to a move below them before declaring this trend move over. The FTSE has room to move down to around 6300 before hitting the tramline on the chart. So far the dips have been bought and fairly quickly, so we shouldn't have long to wait to see if this is the beginning of something more than a dip.

FTSE100 - Daily

FTSE250 Update - Good run stretched

FTSE250 has had a very good run of late, no one should be surprised if from here there is at least a decent pullback. More a reflection of the UK economy than the FTSE100, the 250 has defied bear hopes that it should be going the other way. No one should be surprised though that on the expectations of economic improvement to come, the FTSE250 is looking ahead.

Of the two charts, daily and weekly, the latter still looks the more positive. Daily MACD is suggesting that a pullback is on the cards, although it will be interesting to see if we get a period of divergence before price falls. MACD is still a long way from the zero line and the weekly chart gives more hope that this will be a pullback within the prevailing bullish trend. The 250 could lose 1500 points before hitting areas of major support at around 12100.

Charts:

FTSE100 Update - Risk off again?

So, it took the return of Berlusconi and the rise of another comedian in Italy's election, Beppe Grillo, to put the jitters under the markets to start this week. It had to happen, risk on having been a popular phrase for so long with the traders that you would be forgiven for thinking that markets had forgot how to fall. The FTSE survived without a whimper the UK ratings downgrade over the weekend, with talk of it being "priced in", but Italy reminds the markets of the bigger picture of Euro problems and the fact that democracy doesn't always produce what the markets would like.

However, the daily chart on the FTSE100 has been showing for a little while MACD divergence. For most of this month the MACD indicator has been suggesting weakness although it is yet to fall below the zero line and price on the chart continued to test new highs. It will be interesting to see if the FTSE can hold the lower trend line on the chart below at around 6200, but if this is finally the beginning of a bigger sell off then we shall have to see if the support points on the chart holds at around 6100 and then 5900-6000.

FTSE100 - Daily

FTSE100 update - a look at the daily chart

The chart is still in a bullish mode, but with a little weakness in the trend which should be expected after the run up in January. So far there has been no big sell off and while the MACd indicator is negative it is still some way off from the zero line. Price is now touching the 20dma, but still has some way to go to hit the 50dma. We seem to be at one of those wait and see junctions, but there is little indication that the market wants to fall a long way.

FTSE100 Daily

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

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

FTSE100 Update

The FTSE 100 still looks quite bullish, although you would have thought that after its most recent run, the early Santa and new year rally, it would be due for a rest. Both the daily and weekly chart looks pretty positive that there could be more upside.  The 20/50 dma crossover that happened back in December looks strong. MACD indicator looks very positive on both the daily and weekly chart. Other than bullish over enthusiasm there's not a lot here for bears to grab hold of yet to say that a big fall is on the cards from here.

Who knows, but it looks like a risk on attitude seems to be back and this may carry on until the spending and debt ceiling debate starts again in the US. I would expect some level of pullback soon, but unless it gets really bad the charts are looking good for more upside.

Charts:

Some popular posts from 2012

Here are some of the more popular posts, in terms of hits, from the last year (or 6 months or so that the blog has been going).

It would appear that we all like something that is free, even better if it is helpful as well. There are quite a few good free online trading, investment magazines and when I find something new I add it to the list.

Something for free - online trading/investment magazines

What time frame are you trading/investing in

Should you follow the news?

Vodafone

Dividend Payers

Technical Analysis

US Fiscal Cliff

Market update - A sea of red

So, after a period of Fiscal Cliff hope the markets are a sea of red this morning on the news that a Republican Plan B to reduce taxes couldn't even get enough votes from Republicans to get through Congress. However, with markets falling like a stone on such news it really does show how dumb they can be. Dumb because even though the markets seem to be going up on the news of this Plan B, it was clear from the start it was never going to get very far, President Obama had already clearly said if it got through he would veto it. 

Why then were markets going up on such news that would have lead to a sell off anyway? Plan B was never going to get anywhere yet markets were rising on false hopes. I suppose that is the way markets work, if you are looking for logic and rational behaviour then look elsewhere. At this stage with the politicians doing their usual let's take it right up to the wire act because that is what we always do as we play the game of politics, markets were clinging on to any hope. Still, the charts were showing that the current run was extended, for it to go further and extend the gains of the early Santa rally, more Fiscal Cliff good news was needed, even if a Plan B vote was doomed to fail the markets were clinging to anything.

So, FTSE 6000 which seemed very near just a few days ago is now in retreat. Santa probably won't deliver that present until the new year, assuming that the politicians in the US do cobble together some sort of deal. Looking at the FTSE and Dow daily, it does look like they are in the process of a move down, indicators look negative, the only hope being that the latest 20/50 dma crossover to the upside does appear to be offering the potential for support. Price is currently hovering between the 20 and 50 dma. However, the charts are telling us that the markets are set up for Fiscal Cliff failure if no deal is made.

Charts:

Market Update - FTSE100

The FTSE100 is still looking positive as we go into Christmas and the possible Santa rally, but is it possible that the market is running out of steam? The recent run is now well extended and it could be that Santa came early this year.

The last few days have seen the market largely going nowhere, no doubt waiting on more Fiscal cliff news, but the charts are beginning to look more positive towards a continuing move to the upside, although it is tentative. We have a 20/50 dma crossover to the upside, backed up by various indicators. The potential negative is that the FTSE is now facing resistance and the MACD on the daily chart could be weakening, the market might not go much further without good news to push it on. Still, the charts are nicely set up for a Fiscal cliff move to the upside if a deal comes in the next week or so. However, if there is no deal or the talks suddenly go bad, then we could see that MACD weakness on the daily chart roll over quite quickly as we get the next downward move. On balance and given no bad news, the charts look better for bulls than bears, but after the recent run you would expect a pullback soon anyway. 

Charts:

FTSE100 Update

Surprisingly perhaps, the FTSE 100 is actually looking more positive on the longer term charts. It's a surprise because over the weekend lots of negative comment regarding the US fiscal cliff seem to dominate the financial news. So far this week the markets seem to have taken it in their stride. In part this is a continuation of the recent recovery trend that can be seen on the charts, but it also might be suggesting that despite all the political position taking by the politicians, the markets are pricing in a deal that has to happen. There is some justification for this as history shows.

....seasoned Washington hands say that once this rather gloomy back and forth has played out - and it might take another week or more - the work towards reaching a solution that both sides can sell to their parties and their lawmakers will begin in earnest.

A deal by Christmas, a week before the fiscal cliff deadline, remains uncertain but not out of the question. The so-called fiscal cliff is a combination of U.S. government spending cuts and tax increases due to be implemented under existing law in early 2013 that may cut the federal budget deficit but also tip the economy back into recession.

The pattern of little happening until very close to a holiday is well-established on Capitol Hill. The past three pre-Christmas seasons brought important eleventh-hour developments on health care in 2009, tax cut extensions in 2010 and the payroll tax holiday in 2011.

It's so ingrained that many Capitol Hill veterans routinely, and sometimes mistakenly, dismiss as theater pronouncements of progress or stalemate that occur more than a few weeks before the holiday.

"The Congress doesn't work on the clock; it works on the calendar," said Republican Senator Roy Blunt of Missouri, who in 15 years of serving in Congress, including leadership jobs, has been through plenty of tough scrapes.

"There is just that required moment when something has to happen because you've run out of time," said Blunt. In the meantime, "there is a desire to maximize your negotiating position until you realize you don't have any room any more to negotiate. It almost invariably works that way."

http://articles.chicagotribune.com/2012-12-03/news/sns-rt-us-usa-fiscal-congressbre8b205w-20121202_1_fiscal-cliff-representatives-john-boehner-payroll-tax-holiday

So, there you have it, politics will play its part and its a system where things regularly go down to the wire because that is part of the game. On this occasion neither side will want to be seen as being responsible for there being no deal that results in a panic and puts the US economy back towards recession.

For the markets the time up to Christmas with no deal in sight is still likely to be a rocky one, but if a deal is reached then the charts suggest we are setting up to go higher. The Santa rally may still be on.

Charts:

FTSE100 - where next?

FTSE 100 has bounced a little from the falls of last week, is it of the dead cat variety before falling further or a signal that it still wants to go higher? The FTSE hasn't fallen as much as the US markets and even though we have a 20/50 crossover to the downside on the chart it could be leveling off and hasn't been that steep. MACD is also heading upwards, but is still below the zero line. The chart still looks negative, but could go either way at the moment.

And we could be setting up for a Santa rally.

FTSE100