Archive for Market Analysis
Stock Market Training Podcast Update
Posted by: | CommentsTake control of your destiny with Free & Premium Stock Market Education & Training
A selection of the best articles from liberatedstocktrader.com for July / August 2010
In the August episode of the Liberated Stock Trader PODCAST
- Top 10 Stock Tips
- Stock Price – Bid – Ask – Spread – Liquidity, What does it all mean
- Great Online Stock Market Resources
- Types of Stock Charts & How to use them
- Stock Market Analysis July August 2010
From pocket change to financial independence, your future in your hands with the Liberated Stock Trader.
US Stock Market Anaylsis – August 24 – Pre Open
Posted by: | CommentsWell I am back from vacation, after a tour of Europe covering Switzerland, Austria and Hungary. For anyone visiting Europe, especially Austria I would highly recommend visiting Krems an Der Donau (Krems on the Danube) especially the beautiful village of Dürnstein, which is overlooked by a castle where King Richard the 1st of England was held prisoner for a ransom of 35,000 kilos of silver by the daring Austrians.
Rested and eager to catch up with the latest developments in the Stock Market I was relieved to see that my last market update on the 5th of August was indeed very timely.
I suggested that the market was showing signs of slowing and that you would need to have a contingency plan ready.
- If price breaks below the 200 day MA – move to cash or go short (two days after my report price broke temporarily below the 200 day MA & 3 days later we saw a huge 2.82% plunge through the 200 day MA)
- If price rests on the 200 day MA and pauses for breath, then starts to advance, go long and look for higher volume. (for 4 days the price did pause for breath, before plunging downwards)
- We may see some sideways movement over the next few weeks, so maybe a good time to take a break. (the sideways consolidation lasted 4 days before the move down)
Since my last note the SP-500 is down over 5.3% and has resumed a short term down-trend, which adds to it’s medium term and long term down-trends. Down is the direction of the bear.
How can I predict the stock market direction?
It is not rocket science! You can do it too!
However, it does require learning technical analysis. The key is to use the right mix of time frames, indicators and combine this with the techniques of spotting early divergences in key Price & Price Volume Indicators.
With 16 hours of intensive education you can do this too. Fast track your knowledge with the Liberated Stock Trader Pro Training Course.
US Markets Showing Signs Of Slowing Down
Posted by: | CommentsI am heading out on vacation for a few weeks, but wanted to leave a brief market update before I leave.
The US markets are currently sending mixed signals and if you are actively trading at the moment – be careful
Bullish Signs
- July saw the breakout of the down trend from the April high – “Price Channel Breakout” – Positive
- Price dragged itself above the 200 day moving average and has remained there for a few days = Positive
- MACD still looks strong
Bearish Signs
- Volume has been diminishing over the last 10 days suggesting a backing away from the rally
- RSI & TSV are not negative, but they are showing sighs of slowing
Contingency Plans
Always have a plan ready!
- If price breaks below the 200 day MA – move to cash or go short
- If price rests on the 200 day MA and pauses for breath, then starts to advance, go long and look for higher volume.
- We may see some sideways movement over the next few weeks, so maybe a good time to take a break.
Have a great holiday everyone.
Gold Members – Special Market Report 23rd July 2010
Posted by: | CommentsThis message was sent on Friday 23rd July 2010 (pre market open) to Gold Members – those who have purchased the Liberated Stock Trader PRO Training Course
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To : Gold Members I hope your PRO training is going well.
I just thought I would give you a special market analysis – only for PRO – Gold Members
The markets are starting to look lively, we are seeing positive divergences in the key oscillators RSI, TSV, Money Flow / MoneyStream, price is moving up on increasing volume, despite the abundance of bears and bad news. The probabilities are shifting from larger downside movements to potential upside movements.
Also in Chapter 3 of your training, the seasonal cycles section shows in the last 10 years, August, October, November and December to be good months.
We might be shaping up for this.
The market is volatile at the moment, and any serious bad news might negatively swing the entire market. So keep alert and be aware of a “potential turnaround”. We are still officially in a downtrend, but the market is looking to shape up for at least a short term move upwards.
Have a great weekend
Barry
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If you would like to fast track your stock market education and get the benefits of being a gold member see the Liberated Stock Trader PRO product
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Global Stock Market Today – Do the global stock markets move in sync?
Posted by: | CommentsI have been receiving a number of questions from members regarding the direction of various stock markets. Questions include
- What is the direction going to be for the FTSE 100 in the UK
- Is it wise to invest in the Karachi (Pakistan) Stock Market?
- Is China still a good investment?
In order to answer these questions we need to take a global view of stock market performance.
As regular members will know I perform a stock market analysis only at points where I believe the direction of the stock market will change. Sometimes I add analysis to confirm my original hypothesis.
My regular analysis usually focuses on the US Markets (SP-500, Russell 3000, Down Jones Industrials). The reason for this is I trade these markets actively and perform this research regularly for my own trading strategy and decisions. Why do I trade US?
- Low Costs
- Different timezone – I can trade in the evening
- Great News Sources
- Excellent discount brokers
- Extremely liquid and more dynamic than many European Markets
The Global View of the Stock Market
However, I know that many of you trade different markets, the site membership consists primarily of people from the USA, India, UK and Germany. But many other nationalities are also represented. What a multicultural bunch we are. I am an Englishman living in Germany trading the US markets.
To compare the major stock market indexes, I jumped over to Yahoo Finance and plotted them all on the same chart.
I plotted the chart in a way that shows a similar starting point ; the bottom of the global financial crisis March 2009. This is a good starting point as nearly all indexes crashed horribly at the same time. Also as the comparison chart above does not show values but percentage change, March 2010 is the perfect point.
What the Global Markets have in common
Upon initially viewing the chart you can see a number of important similarities.
- In general they move in the same direction
- Although, for example, an individual day may have a positive result for the Sensex and a negative result for the FTSE, we clearly see that major fluctuations occur in a synchronized way. Perhaps due to the fact that global news of serious macro economic significance ripples through the markets as they open for trading, causing the “Big Money” to make market corrections.
- There are key pivot points in the global economy where all market will change direction at the same time. March 2009 (direction up), June 2009 (direction down) July 2009 (direction up) April 2010 (direction down) and so on.
Performance is the difference in the Global Markets
We can plot on the chart some of the key global market reversals as previously discussed. But, it is also important to notice that although the markets are roughly synchronized, the momentum that some indexes carry into the trend are a lot stronger in some indexes. For example, the Sensex (India) exploded upwards in March 2009 for an 80% increase in just 4 months, leaving other indexes behind. Very dynamic!
Also look at the trend lines for the last 3 months.
Stock Market Direction & Performance since the Financial Crisis
- Sensex – The Sensex is by far the best performer out of all the indexes, it is currently in an intermediate up trend and is challenging to move to new “post-crash” highs. It has doubled in worth to over over 100% since March 2009.
- Hang Seng – The second best performer with a circa 65% increase since March 2009. The index peaked in November 2009, and has been in a slow shallow down trend since then.
- Standard & Poors 500 – Peaked in May 2010 having increased 77%, but has since slipped back to 58% – our third best performer.
- FTSE 100 – Also peaked in May 2010 and with a similar pattern to the US markets, but unfortunately a much poorer recovery – the fourth best performer managing only a 40% increase.
- Nikkei 225 – Japans flagship index has only managed a meager 24% improvement. It is by far the worst performer and is currently in a very solid down trend.
The Long Term View of the Markets
Of course this recovery league table we have here has to be considered within the bigger picture. For example :
- How far did the indexes drop during the crash?
- How much of that loss have they recovered?
- How much more volatile is one stock market index versus another.
Here you can see pre-crash and post-crash view (in this chart I have also included the German DAX)
Clearly no index has fully recovered, and in fact all are still in a long term down-trend, although India is closest to a full recovery.
Conclusion of the Global Stock Market Analysis
So in the short term we see that markets fluctuate and show key reversals at very similar points in time, however some markets are significantly out-performing others and exhibit very different volatility characteristics.
So there you have it, a stock market analysis of the key indexes. You may be tempted to think “Well the Sensex and the Hang Seng have performed the best, I should invest in those markets”. Well logically that might be true, but there are a few things to consider before you do.
- Volatility – the emerging markets might be performing well, but in the bad times the down-side (potential loss) is also very punishing
- Market Accessibility – can you get high quality Technical Analysis software that provides the right detail and fundamentals to enable you to trade the Chinese or Indian markets?
- What are the transaction costs?
- Is there sufficient liquidity in the stock to enable your to get out when you need to?
- How are the companies financially regulated, are they majority government owned?
If you want to create your own Global Stock Market Analysis, use this link and change the time-frame on the chart. Yahoo Finance
Good Luck
Barry
Stock Market Analysis – SP-500
Posted by: | CommentsWell, everyone is getting excited! We have seen a 6 day rally in the US Stock Markets and indeed around the world, so where does that leave us?
Are you bullish or bearish?
As mentioned previously the economic outlook is not looking good on the whole, we are seeing a jobless recovery in the US and in most major markets production and demand is still down. The fittest companies are surviving through endless rounds of cost cutting and redundancy programs. However we are seeing good earnings coming in.
But what are the markets telling us?
To assess this we use Technical Analysis.
Chart provided courtesy of Worden Brothers Inc.
Stock Market Analysis
Looking at the chart of the S&P-500, we can take a glimpse of the state of the US Markets
- The most recent rally has reached the top of the down-trend resistance line (top pane in the chart)
- The price has not yet surpassed the 200 day moving average (red dashed line)
- The previous June rally failed to significantly pass or hold above the 200 day moving average, meaning is is a significant resistance line
- MoneyStream (alternatively MoneyFlow) is still remaining very bearish, although it recently crossed it’s moving average, we would like to see it cross its own down trend-line (white arrow middle pane)
- This recent rally has seen a significant drop in volume, meaning that although the market is pushing higher, less people are trading this rally. This infers that people are backing away from the increasing prices and are concerned about a further downside move.
Possible Scenarios
- Most likely – the market will move up to test the 200 day moving average at approximately 1115, then move back down to continue the downtrend eventually surpassing the July low.
- Less likely but still possible – market will move up and break through the 200 day moving average. If this happens we would like to see the price hold above the 200 moving average for 3-5 days, and see increasing volume. This would give us a good indication the up-trend will continue and represent a change of character for the short term.
No Absolutes
There are no absolutes in the stock market, especially when making predictions. We can only make an analysis based on the data we have, form conclusions, rank them in order of possibility and create an action plan based on those likely scenarios.
The market usually continues its current trajectory (in this case down) until it proves that its direction has changed. The most likely proof here is a significant break of the 200 day moving average, preferably on increasing volume.
Good luck with your plans.
