Archive for Market
Europe unveils a $1 trillion package to stabilize the Euro
Posted by: | CommentsPrepare for a big positive day today as the EU & IMF underwrite a massive Euro stabilization package in an attempt to thwart contagion of the recent run on sovereign debt. As we know, governments can move markets and indeed are responsible for the health of the business environment through manipulation of Monetary and also Fiscal policy. Although the EU acted late in trying to arrange a bail out / emergency financing for Greece, it has now acted very aggressively to support the Euro currency. Expect at least a short term bounce in the world stock markets today. This show of strength should thwart what was starting to look like a 1987 style crash. If it succeeds it should ensure that the recovery from this fall should be swift.
In 1987 the SP-500 fell more than 28% in 3 months, so this move of -8% in 2 weeks is small in comparison. This week will show us if the markets are confident that Europe has done enough to thwart the speculators, and return confidence to the markets.
US Futures are up, most European markets are opening very strong and the MSCI world index rose 1.2% as I go to press. It should be a positive and interesting day. Prepare for big volatility in the coming days and weeks as the market contorts and gyrates itself trying to find sense in these turbulent times.
Stock Market Analysis – 27. April 2010.
Posted by: | CommentsA mixed day on the markets yesterday, despite excellent earnings reports from such big hitters as Whirlpool and Caterpillar who echoed positive outlooks for the economy and future earnings.
Medium Term View
But how does the medium term picture look. Below I have a 5 day per bar chart stretching back to 2006. This shows us the last 4 years. What is extremely interesting here is the market is approaching is 200 bar Moving Average (white dashed line). You can see this is a significant area of support and resistance. In the chart in 2008, when the SP-500 finally capitulated and made its most violent of moves down, it did this after significantly breaking down through the 200 bar moving average.
We are now seeing the price line approach this area, and I believe make an attempt to break through it. A break of this line would in my opinion be very bullish and signal a clear continued move upwards. As always we would like to see this on increasing volume and with support form the other indicators.
SP-500 Chart of the Day - Image Courtesy Of Worden Brothers Inc.
Short Term View
We are seeing increasing volume on the S&P500 since the beginning of April which combined with this uptrend is continuing to give out a Bullish signal. As we know price up volume up is very positive indicating there is increasing appetite for stocks at higher prices.
So for now all looks good. Or does it?
There is one fly in the ointment. The oscillators. On both a 5 day chart and a daily chart the RSI 14 with a 14 day moving average is showing negative divergences. This also goes for the TSV indicator, ROC and Momentum.
However, price is the most important indicator and for now all seems to be rosy in the the garden of Eden. Just be careful not to lose to much of the profit you have made over the last 8 weeks, hoping the market will continue up. Have no emotion, trade the picture.
Market Update – US Dow Jones DJ30
Posted by: | CommentsThis market “refuses to die”,
What a rally! No matter what the bad news is, disappointing jobless claims, Goldman Sachs fraud investigation or even volcanic ash over Europe, the Stock Market participants are in good spirits.
Now I am not a “perma” Bear, but now is a time to be a little careful. We have just kicked off earnings season and things are looking positive so far. But lets be clear about this, we need an amazing round of earning reports, including revenue growth, not just earnings growth due to companies cutting expenses by making more and more people redundant. Why do we need a great earning season? We need it just so we can maintain these levels in the Stock Market.
The last time I checked the Price Earning of the S&P500 was at 21. Historically, a P/E of the major US indexes has not been sustainable over 25. In 2000 we reached a PE of nearly 45 on the S&P500 and we all know what followed. So, I would not say the market is at a huge discount today. However, there are still plenty of bargains.
Technical Analysis of the Stock Market
As I has discussed many times in the lessons on RSI / TSV / ROC / Momentum, we need to look to divergences of the Price & Price / Volume indicators with price. I believe we have one such divergence occurring with the SP-500, DJ-30 and the NASDAQ Composite.
RSI Divergence DJ-30
Now I am not saying cash in your chips right now, the market is in a short / medium term uptrend. Simply be on maximum alert and keep your stop losses tight.
As Charles Dow said…
“A trend is in effect until it gives definite signals of a reversal”
We do not have a definite sign of reversal yet. We have simply some early warning signals.
Is the rally in the S&P500, DJ-30, Russell 3000, NASDAQ still alive?
Posted by: | CommentsWe can see over the last few days that the rally seems to be petering out in the US Stock Markets. It is always of great importance that we buy stocks as the market is about to rise, or in a continued uptrend. This allows us to maximize our profits and minimize our losses. To have a check on the future direction of the market it is helpful to compare and contrast the major indices to see if they are all still moving in the same direction or a few are flagging, see Dow Theory.
The graphic below compares the S&P 500 (SP-500), the Dow Jones Industrial’s (DJ-30), the Russell 3000 (RUA-X) and the Nasdaq Composite Index (COMPQX).
Chart Setup
Daily Bar – Candlesticks
- Moving Averages – 10 – 20 – 200
- RSI – Relative Strength Index 14, MA 14
- Time Segmented Volume 20 – MA14
Read More→
Coca Cola Buying Coca Cola Enterprises CCE – Trading the news
Posted by: | CommentsWhat a great example of my previous article related to trading the news.
A typical example of when big news hits the market those with superior news sources can trade it. In takeover situations prices rocket to just under the bid price of the buying company. In US out of hours trading the stock price of Coca Cola Enterprises Ticker:CCE rocketed from $19.25 to $25 a 25%+ gain, on the news that Coca Cola will be making an acquisition, adding over $2 billion to the worth of this company. $2 billion is a lot to add to the value of a company overnight, this was the bit hitters trading.
If you had a news source that delivered this information to you 30 minutes ahead of everyone else and you are geared up to trade in an absolute instant you could have made good money here. Especially if you had leveraged your money with Option Calls. In and out in an instant. Those that were in early are probably selling as we speak.
Can the private investor compete with the Wall Street old boys network of news? Not really, that’s why I do not trade the news!
SP-500 continues decline to 1045.50 but what next?
Posted by: | CommentsI wrote on the 21st January & 27th of January forecasting market decline in the short term outlining the following scenarios.
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We essentially have 5 scenarios
1. Today’s negative action halts today and builds a base at the intermediate support line
2. We experience further downside action to the medium term support line at 1072
3. We pullback to 38.2% of the July Trend (6 months)
4. Pull Back to Fibonacci 50, at 1015
5. Experience quite a serious correction releasing the tension of the March to date rally with a pull back to 980.
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Of those 5 scenarios I suggested 2, 3 and 4 were the most likely.
So what happened? Read More→
