Tag Archives: FTSE 100

Brexit – the scapegoat

Good day all,

Let it be known: Brexit will not bankrupt the world; Brexit will not bankrupt the UK. If anyone says he is a free man, if anyone says he is free to make his decisions, then shame on those who lambaste the British people for bringing financial catastrophe on the world. The British people have voted – against the avalanche of an environment pushing a globalist agenda – and they have decided on taking 100% control of their own country. What crime have they committed? Yes, there is going to be a lot of work to be done by lawmakers, legislators, businessmen, etc; but is there any crime in that?

Since this is a website pertaining to the financial markets, I will keep the scope of this post focused on the financial markets’ side of the issue. Even till this day – 15 days after the referendum – the mainstream media is still raining a deluge of criticism at Brexit voters, and preaching about the impending collapses that will stem from a Brexit. What is worse for me, as a trader, and for all of you out there who have been following the markets for years, is when I hear of how a Brexit will cause the next 2008-style financial collapse. Seriously?

First, we do have at least a week’s worth of trading to see if we are on the cusp of disaster. To that end, we have a definite answer: no. The FTSE is already above levels seen during the referendum week! European indices are off the lows made after the referendum, ditto for Asian indices, and American indices have just about recovered all ground lost after the referendum. If Brexit was as bad as the media portrays, the markets would continue sinking. The Pound, I grant you, is still falling but give it some more time, and it should bounce back. The mainstream media may be fooling everyone else but I hope that we, as financial market followers, will stay calm and know that this is simply a knee-jerk reaction.

A little hindsight analysis while zooming in on the referendum week. It seems to me like the markets moved quite closely in tandem with sentiment portryed by the media. At first, the markets dropped 4 sizeable red (or black) candles 2 weeks before the referendum when polls seemed to indicate that a Brexit was actually in the offing, then in the week leading to the referendum, I remember very well that the Bremain camp seemed to wax stronger and stronger – especially coinciding with the shocking attack and subsequent death of MP Jo Cox. So, with the chart in view, it is very clear that price action was almost dictated as according to the media. Why the FTSE has shot up higher is beyond my comprehension although one thing we can be very sure of: Brexit is not to be the scapegoat for any kind of disaster hereafter.

FTSE

With that said, let us not climb onto the bull so quickly. For quite a long while now, I have been feeling uneasy about the markets in general. The generally huge, “toppish” patterns in many indices globally is certainly cause for concern. Some people in authority – including Brexit poster child Nigel Farage – have indicated that the UK will head into recession regardless of Brexit. According to the charts, this is quite a strong statement to believe in. Markets have been rounding off for some time already. While this can simply be a large breather in a continued bull-run – like in the aftermath of the US credit downgrade (how come the media did not blast Obama for that?) – generally-speaking, it is supposed to herald the stagnation or decline in the economy. So, taking the chart into account, it is a very probable scenario to expect in the coming twelve months. Why should Brexit take the rapping for this? The charts were already turning; the markets were already tanking long before anyone was concerned about Brexit.

In conclusion, I hope we can all bear the big picture in mind: financial markets have been tanking for quite a while now instead of sauntering up in a typically strong uptrend channel. If the UK does enter into recession, it is not because of the Brexit but for other reasons that have already been factored into the financial markets.

FTSE2

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Dilemma of dynamic patterns

Good day traders,

As the market would have it with me so often, the exact opposite of my sentiment usually happens. Ever since my last post, indices around the world have rallied hard. The sharp devaluation gave long-term players an opportunity to snap up bargains on the market. As we cross over to the latter half of the year, indices are either at or above their 200-day moving averages, and having made higher highs and higher lows after the scare in January. Unsurprisingly, price action over the last few months have developed a bottoming pattern of sorts: specifically, unconfirmed, inverted head-and-shoulders patterns are showing up on many charts. It may be a case of the breakdown from large, upright head-and-shoulders patterns resulting in a consolidation instead of further downside.

With every wek and month of upside, it does dent my confidence of the longer-term decline I am expecting. Being a long-term player is analogous to a huge ship’s maneuverability compared to a small speedboat: I cannot and will not change my outlook until way past the bottom. It is tempting to switch from a bearish to a bullish outlook now but I am still not convinced with the recent rally.The dilemma I face now is because of the presence of dynamic patterns that are suggesting upside to come. I use the term dynamic pattern to mean general price patterns that have a particular shape in recent history – these patterns do not have conventional names like the head and shoulders and others; or they may but with a certain “twist.” I will illustrate what I mean in the charts below.

The first chart is of the CAC 40. The turbulence late in 2014 produced a descending, broadening wedge pattern, which also turned out to be a inverted head and shoulders. Early in 2015, the market took off and the CAC 40 blasted off to new, major highs. Now, steer your eyes to the right half of the chart, and you will see a similar phenomenon. It is not so much the small, topping head and shoulders that matter but the similarity between the two huge, descending, broadening patterns. I have veered away from trading patterns in recent years but it is magnificent to see such huge patterns unfold, and even more important to gauge their sucess rates. Ditto for the STI and Hang Seng Index- albeit making reference to an inverted head and shoulders in 2011-2012.

A1

Moving on, I have the Dax. The dynamic pattern in the Dax starts with a good, long uptrend before a downward-biased contractional period. Then, price moves down in a classical a-b-c Elliot Wave retracement pattern. In this dynamic pattern I am identifying, the Dax then goes up and congests for a little while before flying up and away. Now, look to the right half of the chart, and see if you agree with my judgment of  the same phenomenon brewing. With such beauty in the charts, how can I ignore the case for upside?

The next chart is of the S&P 500. Bear in mind that I have highlighted the presence of a general, large, rounding pattern – a stalling in the long-term, multi-year bull run. Within that large pattern is wht we now see as a clearly-defined head and shoulders with a right shoulder breakout upwards some time in March of this year. Price is currently testing the head region. Take note of the smaller head and shoulders that is also undergoing a head test now. In this case, this dynamic pattern does not indicate anything since the head test is still ongoing.

a2

In the next few charts – FTSE 100, Hang Seng, and Russell 2000, you will see what I mean by the large, rounding, topping patterns strting to give way to what seems like a reversal, inverted head and shoulders. It is certainly not the first time I see such a phenomenon but my experience tells me it is ust about fifty-fifty where the market will head to next. Sometimes it carries on higher and proves the inverted head and shoulders to be correct – rendering the earlier head and shoulders to be invalid, or the market dives lower and proves the inverted head and shoulders (usually the smaller of the two) to be a false reversal indication. Tough call is it not? Such is the market!

a4 a5 a6

All in all, I am still wary of the multi-year bull run that has lost some steam in the last 2 years because the looming, gravely topping pattern is still intact; however, there could be short-term plays to the upside.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

 

 

End of Europe’s uptrend while America advances?

Good evening one and all,

While browsing through charts of my workstation, I noticed quite a difference between major European indices and American ones. The general picture of the European indices seems to be that of a high made in the middle of the year, then a collapse, followed by a quick recovery, then another fall, and a small recovery to where the markets stand now. American indices were tested when selling pressure came in a few weeks ago, but buyers came out fast and the indices made V-shaped recoveries. These V-shaped recoveries are quite reliable to be traded on: the buying pressure simply blasts the market back to where it was before the decline. What this all means to me – even as my previous sentences summarized the markets on both sides of the Atlantic. – is that US indices are still considered to be in their tremendously strong uptrends but European indices are looking quite “questionable” now – at least with regards to a long-term uptrend.

I will briefly say how I think the charts may be saying something about the general economic picture: If you consider the strength and shape of the uptrend of the US indices – and basic theory about how markets relate to one another internationally – it is quite obvious that US indices have been pulling the global indices along over the years – generally-speaking, of course; however, with my recent assessment of the charts of European indices, it seems to me like Europe may be facing harder headwinds soon. There are countless factors that can come into play – and I obviously do not want to go into them; not on this site at least –  and only when events come to pass can we look back and see everything play out on the charts. But it is something I will take note. American indices are definitely back on track, and there is no indication to me of any reason why American stocks will not continue higher.

In the first three charts below, I have the Dax, CAC 40, and the Footsie. The general picture is the same: a huge consolidation after a long and strong uptrend. The worrying thing is that the recent retracements cut deep, and the markets were not able to recover back to prior levels. This is very different from American indices that have shown healthy recoveries into the prevailing uptrend. I am not suggesting a crash in European indices – barring a global decline – but when I see such trends stall, it simply means more sideways trading in the months to come. Contrast with advancing US indices, Europe certainly should not be overweight in a portfolio.

Dax   Cac  ft

sp5

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

US leads, Europe testing highs

Evening all,

Another week of trading sees the S&P 500 dancing in 1700 territory. US markets have been proving to be very strong, and global markets are taking cue. European markets are now very near or at important previous highs. I look at the Dax, CAC 40, and FTSE 100.

The Dax is already trading past all-time highs. (As a side note, this is a classic example of the fundamentals being reflected in the chart. Germany is regarded as the strongest nation in the EU). 8100 is closest support. Whichever time frame you are on, the uptrend is very strong. I also do not see any reason why the Dax should not continue higher. The next few weeks of trading will show if the Dax can remain at such a stratospheric level.

dax

The footsie is also trading at all-time highs – albeit slightly below and not above like for the German bourse. However, I am seeing some room for downside in the Footsie. A V-shaped kind of pattern – different from a V-bottom – depicts recent price action. I am usually cautious of such a formation on the chart as it is usually followed by consolidation in the next few weeks. In the long-run, however, as a trend-follower, I like to see highs being tested.

ft

Next up, we have the CAC 40. Despite performing very badly in 2011 – returning down to test 2008 lows – CAC 40 has managed to recover to post-crash highs at the 4100 region. CAC 40 did run up there earlier in the year before succumbing to the June correction. Like the footsie, I see a V-shaped formation which is not supposed to be a very bullish sign. For now, I have to respect the resistance at the major high; though, if markets continue to move up convincingly, these bourses should take cue.

Cac

All in all, I continue to wave the bull flag because of the clear uptrend in major indices. The smaller European indices like Greece, Italy, and Spain may not paint the same picture as Germany’s; however, most other indices are on the same uptrend path from several years ago. In the short-term, majors highs are being tested, so the next few weeks should tell us if stocks are ready to soar to new heights. If not, this major high will send the market down for another correction like what we had in June.

US indices set to move up in short-term?

Hey all,

As the year 2011 draws to a close, I will write about my year regarding technical analysis. Equity-wise, I did not do too well. Though, I did have a good year in the forex market. Anyway, I will put up long-term charts on the equity indices next year. For now, I am seeing events on the charts of US indices. Let’s take a look at them.

The S&P 500 ended the year flat, though we had alot of volatility throughout the year. Looking at the chart below, you can tell US stocks traded in two separate regions. The dividing level was 1275 for 2011. Going back to 2010, you can see an important resistance level at about 1220 (red line). After the US debt downgrade this year, the S&P 500 found resistance right at that level too. Though, that line did get violated (in purple box) towards the downside after we broke through once; if I’m not wrong I had a post about that. Anyways, the important thing is that we are clearly above 1220, and looking to test the important 2011 level of about 1275. We did break through it once this year, only to reverse all the way down. So, in the short-term ahead, any upside should get up up and above the important resistance level of 1275.

Now, my post today is centered on an unconfirmed chart pattern I see on the US indices’ charts. Flirting around the 1220 level, the S&P 500 ended up forming an unconfirmed inverted head and shoulders. If you have been following my last few posts, you will know I identified an unconfirmed, good-looking inverted head and shoulders in the STI, that now seems to have fizzled out into either a failed pattern or one with unexpected downside breakout. Nevermind that, I believe in sticking to my guns and not giving up after a failed pattern. Once again, I will be leaning towards the bullish side for US indices because of this inverted head and shoulders. The pattern comes at a time when the S&P 500 is looking to break through the resistance that was once support before the US debt downgrade. So, what better than a chart pattern to act as a catalyst for a rally past the resistance? Key support for this unconfirmed pattern is 1200. If we do experience selling pressure instead of buying pressure in the weeks ahead, 1200 is the leel to watch. Breaking down below 1200 means one of two things – we have a downward breakout from the inverted head and shoulders, or we ahve to render the pattern invalid and take it off the chart.

The next few charts you see below are charts of US indices with the small inverted head and shoulders.

  

Finally, I have a longer term view of charts of certain indices to show you all. Is a huge head and shoulders in the making?

   

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

Red…in the face

Evening,

I do not need to say what has happened to the stock market. Unrests in several nations are causing stocks to drop. From a contrarian’s point of view, this is opportune time to get in the market – when there is irrational selling. For some of us, our portfolios have taken a few hits over the last few days. I am not excluded from that, having stayed in long positions. I have just taken a look at the charts, and all I see is a whole bunch of awful – looking charts. Candles breaking through 200-day averages, channels violated, patterns busting up (I have 2 busted triangles), and several other stocks that seemed okay, suddenly turning bearish.

Quite a number of my latest posts about local counters can be considered busted as well, due to the latest sell-off happening in the markets. I do not want to comment on every single chart again. In a time like this, I can only write them off as not going my way. If I were trading those counters, it will be just one of those blue months of bad losses. Like in any book you will find on trading, or anything in life for the matter, I can only pick myself up and consider the recent sell-off as a blip. I was expecting downside in the STI, which should mean I should have been cautious in stockpicking. Sadly, I was not, and now I will have to label myself as having waved the bull flag for too long. I am still a year-long bull. I wrote some posts at the beginning of the year, and I am continuing to hold my bullish stance. The only consolation is that I did expect some downside in the first quarter. For my sake, I hope the markets do eventually turn up after this whole protests fiasco is over.

Now for some charts to keep things technical, since this is not my life blog – I do not plan to splash personal posts all over the place.

This is the STI, which I have been showing you all quite a few times in the past month. First off, we have a current, large channel I identified. The recent sell-off has sent the STI below the channel. I want to wait for some more days before considering this channel as invalid. From a purely technical standpoint, one can point a finger at the head and shoulders (in yellow shades), and say that cause the recent sell-off. This pattern is not too big, but seeing how the immediate future looks bleak, I have taken a projection of 2900 for the STI. The height of the whole pattern projected downwards brings us to 2900 region (refer to purple arrow). I have included fibonacci retracements studies as well. It is interesting to note that the important 50% level is at the 2900 level. So I do see some more room for downside in the STI.

Next, I have a couple of charts showing a fibonacci retracements studies done using the pre-crash high and post-crash low. I found out something intriguing about the 78.6% level. You can call it pure conicidence, or whatever else, but I will be looking at more 78.6% levels in the weeks ahead.

   

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.

International indices pulling down?

Evening traders/investors,

I have been looking at the charts of indices from different parts of the world. Most of them are giving me bearish signs, which may signal of downside in the weeks ahead.

First, lets take a look at the Nikkei 225. A parallel channel can be seen in the chart. I did show you all this channel quite some time ago. It is an upward channel, and since it was huge in size, i did say that the Nikkei would be proving to us that markets should continue going up. I have bad news for now – the channel has been violated, on the downside. This is a bearish sign, and coupled with a rejection at the 200 day MA (see red arrow), should at least hint to Japanese investors to look at their portfolio again. However, i always tell myself not to jump the gun. Looking at the chart again, we should always allow for false breaks in parallel channels; it does happen from time to time – as long as price does not deviate too far away. I can also see that the Nikkei is at a critical support zone of around 9200-9300. Once the Japanese stock market goes below the support though, i shall have to take a very bearish stance on the market.

Next up, we have the Footsie.

Using Fibonacci Retracement studies (from post-crash lows to post-crash highs), i have come up with the key levels. Just recently, the FTSE 100 has broken the 38.2% level. The rejection at the 200 day MA looks ugly. My next support level for the FTSE 100 would be at the 50% retracement level, that comes in at 4650s. This would be a key level for me, as the FTSE has done some amazing moves after hitting that level (look at the purple arrows). As for now, i would have to be bearish on the Footsie too.

Here are some charts of the US indices. The story is pretty much the same: recent rejection at 200 day MA, and breaking below support levels.

  

I may seem bearish on the markets as of now, however, i still believe and am hoping the markets do stage a rebound. No one wants a bear market. That would simply mean a bad economy, negative jobs outlook, etc. Most markets have fallen below certain support levels; but, there is still a major support region coming up from the range markets traded in right after the massive crash of 2008/2009. This support region would be the biggest one on charts. I am hoping that the end of the World Cup would signal an inflow of money to snap up stocks that have been battered in the past 2 weeks. This would agree with the major support region i see on charts. Anyway, enough of pure speculation – what i see now does not look good at all. Share with me your thoughts on the global markets.

All analyses, recommendations, discussions and other information herein are published for general information. Readers should not rely solely on the information published on this blog and should seek independent financial advice prior to making any investment decision. The publisher accepts no liability for any loss whatsoever arising from any use of the information published herein.