The last few days have seen some big swings either way in Equity markets.
“Where next?” I hear you ask! Our chief market analyst Clive Lambert was on CNBC last night trying to pick the bones out of this price action, looking at the S&P 500 Futures, FTSE Futures, and suggesting Fresnillo as a Stock to buy.
See it on our media page by clicking here.
This morning’s reports on Silver and the FTSE would have reaped dividends for our clients, for different reasons.
Here’s the text of the FTSE Futures report:
We have posted the “all sessions” chart today because it’s actually a bit cleaner, and also shows what we’ve seen overnight; selling.
Selling to the 200 day MA as well, this well watched proxy sitting at 5771.5 today.
Yesterday’s low was 5827 in day session trade so this is a bold resistance above, and if the bulls don’t quickly retake this mark we will likely break through 5771.5 and head to 5615.5 then 5584.
If the bulls can dust themselves down from this weak open and get us back through 5816 and 5827 we then need to retake 5869.5 then fill the gap to 5912.
My gut tells me this weak open is a buying opportunity. The chart tells me otherwise…
Nice “gut feeling”!
Our Silver commentary was a bit more “nailed on”, and since we sent it out first thing this morning in the UK it traded up to 37.330 (as we tuck into our lunch in the UK, awaiting the open in the US):
Lunchtime (in the UK!) Update: We now have day session gap support at 36.400, protected by the broken resistance at 37.020, the latter having done a job in the last hour or so “on the retest”.
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Last week we posted a Blog about the potential Head and Shoulders pattern forming in the FTSE Futures. Things got interesting with respect to this yesterday, which was the crux of our morning report, reproduced below.
The fact that we’re not breaking this line PROPERLY does suggest the market’s ambilvalence is set to continue.
Towards the European close yesterday we were selling off, and we’d got through 5858, the Neckline of the Head and Shoulders pattern that we’ve been watching of late. So on the “Day only” chart that we prefer, as above, we have a slight closing break of this Neckline, and a sell signal.
Except we’re called 50 higher this morning and this will instantly tell us that the sell signal is a false one.
It looks like the market is happy in it’s current moribund range-bound confused stupor, and we’ve got to put up with this situation for a bit longer.
We’re not getting any firm signals at the moment, then, and this counts for the Individual stocks as well, making our (and your) job a rather tough one.
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We have sent an extra report to our customers this morning, outlining the POTENTIAL sell signal that’s looming in the FTSE Futures. Here is the text and accompanying chart:
We have a potential “Head and Shoulders” pattern forming in the FTSE, although the sell signal has not been given yet.
The sell signal comes if we break the “Neckline” which is at 5851, and probably on a closing basis as well (although a “clean” break on high volume would convince me enough to take the signal “intra-day”).
The target, using the traditional measuring technique for this pattern, would be 5600.
Of course this also comes off the back of the recent failure at 6095, which was very similar to the February high/failure (6086.5). The “Double Top” sell signal from this situation would only be triggered on a move through 5584.5, so a long way off yet….
5851 is on the radar, however, so “Watch this space!”
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Below is a sample of a note we sent to our “Premium” clients today; those clients who receive our Trade Recommendations service covering Individual UK Stocks. We’ve gone a bit quiet on this front of late as we await some clarity from the markets. In fact it’s been one of the most frustrating periods I can remember on this front! This frustration may show in what we put out. If you are trading or Broking CFDs on UK Equities and required Technical Analysis to aid your decisions or offer ideas please let us know (clikc the link below) and we’ll set you up with a Free Trial.
http://www.futurestechs.co.uk/professional_trial/
So to today’s note:
If you’ve been wondering why we’ve been so quiet of late it’s because we’re doing lots of head scratching when looking at the charts right now. The Equity markets have been a very fraught hunting ground of late!
So with an apology for lack of recent recommendations here’s proof that we’re not just sitting around doing nothing: A list of every FTSE Stock with a line (sometime just a word!) to say what I’m seeing and why we’ve not got a conviction trade on!
AAL - Looks heavy, but is holding it’s 200 day MA (2950) and previous support in the low 29’s. Scope to 2490 if it breaks
ABF - Very rangy feel to the chart in the short term. Bigger picture suggest scope for weakness to 960 or even 920.
ADM - Hasn’t done anything since September
AGK - Could be worth buying, looking for a hold above 1700
AMEC - Hasn’t done anything since November
ARM - Probably worth buying, but Reward/Risk isn’t right
ANTO - Looks bearish, but downside could be restricted to 1208
AU - Going sideways - No trade here
AV - Going sideways - No trade here
AZN - 200 day MA at 3095 might weigh. 3145 and 3175 also resistance
BAE - Been going sideways since October 2008!!
BARC - Breaking support at 277.50, but next support is 261, then 256, then 253. Too many supports below for a decent short risk/reward wise
BATS - Bullish, should hold 2645
BG - Broke support at 1400 last week but came roaring back. Gap above at 1498 is a worry for the bulls though.
BLND - Slow, steady riser. Good one to hold, but buying at these levels?
BLT - Left an “Island Reversal” back in April, when we shorted it. Scratched the trade on the subsequent high. Doh!
etc etc!!
In Brief: All I keep hearing at the moment is how we will have a 10% correction, so, let’s have a look:
The “funnymentalist” community, particularly Stateside, seem pretty happy with the idea that this pullback will be a “normal” affair and will pull back 10% from the January highs, at which point you can happily pile in, buy the dip, and carry on where we left off…
I thought it would be useful to know where this level is on the markets we watch. So here goes, and we’re looking at the Cash Indexes here, NOT the Futures:
Dow: High was 10730. 10% pullback level is 9657 (currently 10023)
S&P 500: High was 1150, pullback level is 1035 (at 1065 right now)
NASDAQ: High was 1897, pullback level is 1707 (1743 now)
DAX: 6094 was the January high, 10% off that is 5485. BROKEN
FTSE: 5600 high, 5040 is 10% pullback. 5033 was last week’s low, so holding…
Eurostoxx: Pulled back from 3044. 10% back from here is 2740. BROKEN
CAC: high was 4088, so 10% back from there is 3680, BROKEN.
So to summarise, if anyone stateside says to you about 10% pullbacks the simple thing to say is “thanks, but we’re already beyond that!”… especially if/when the FTSE breaks 5030-40.
Keep safe in these markets.
We always welcome feedback from clients and free trialists here at FuturesTechs, so we can strive to provide the best possible service to aid your trading decisions.
I thought I’d use the Blog to answer publicly a few questions we have been asked of late, so here goes with one:
Dear Clive,
Re buying Technical Analysis, I always find myself thinking the same question: “If it were that easy/obvious……’we’ve been bullish almost right from the start of the recovery’……….’gearing up for a sell-off’…… why do analysts like yourself not just make loads of money trading futures or spreadbetting?
If I found it that easy/made so much money I wouldn’t bother selling my levels…
Regards,
RJ
This is a question I’m often asked, especially at Seminars. People are, quite rightly, confused that I appear to be so well equipped to trade the markets, yet I don’t.
I think there are several reasons why I don’t trade, so let’s try and go through a couple.
1. It could be argued that YOU wouldn’t want me trading, because then I would be skewing my comments and ideas around my own position. If the market was clearly going down but I’d been caught with a long position I might be trying to talk it up, convinced that my position was right, and the market was wrong. The problem with this is that the market’s never wrong! But I am a human being, so I am subject to emotions just like you, and fear of cutting a wrong or losing position is one of the most powerful (negative) emotions in trading. The flip side to this argument is also pretty valid, though. The idea that an analyst should be able to trade their views put their money where their mouth is has merit, sure. The problem I’ve found with this is that good analysts generally don’t make good traders. I’ll come back to this notion in point 4.
2. I don’t have time. I run a growing company that’s trying to reach out to all sorts of traders, through seminars, increasing product breadth, and finding new delivery methods to take the product to a wider audience. Not only that but the day-to-day analysis takes a good chunk of time each day as well, starting nice and early at 5.30am each morning (although I’m not on my own, it must be said!). So I don’t feel I have the proper amount of time to devote to trading. I don’t think this is something you can do properly with 20 minutes work a day, and if you believe in those ads that tell you this then maybe you should think about the old “if it sounds too good to be true, then it probably is” rule.
3. I haven’t made (consistent) money before as a trader. I have had a go at trading a few times. In 2001 I worked in a Trading Room in the City for a year. It was a “Prop” room with a bunch of short term traders doing “high frequency” trading. These guys were happy to make a tick on a trade, and did at least 50 trades a day. Whenever I had a position on in the Bund Futures that was more than 5 ticks onside the rest of the guys couldn’t believe I was still in the trade. I wanted to run it for another 10 or 20 ticks, but found myself taking the smaller profit. In other words I allowed what was going on around me to affect my trading decisions - Bad mistake. The other problem was that my trading was fitted around writing the analysis. I would write the analysis from 5.30am to 8am, then trade until 10.30am, the write the analysis from 10.30am ‘til midday, then start trading again. - Oh dear! The result? I broke even, so lost money over the course of a year, when taking into account expenses like the cost of the desk and the professional trading software.
Then in 2005 I put some money into an account to have a go at trading UK Equity CFDs, all the while continuing with my daily analysis, as well as providing stock tips for a CFD firm. I lost most of my stake because I was long of a bunch of stocks one week in a nasty bear move, when my FuturesTechs FTSE report was as bearish as it could be… So I was bearish in my view, but bullish in my positions. Pretty dumb, huh?!
I closed this account down, deciding that trading wasn’t for me, which brings me on to my final point, because so far, re-reading what I’ve wrote, it sounds like a bunch of lame excuses. There is a much more important reason why I’m not a trader.
The main reason I don’t trade?
4. I don’t enjoy it, or maybe I’m just not cut out for it. I am an emotionally highly charged person. I am extremely passionate about what I do. I am also extremely self-critical. I hate it when I get the market wrong when I’m writing about them, and I’m 10 times worse when I’m trading. I turn into a total pain in the butt, and my wife likes me even less than usual! During the two stints when I was trading I found my mood swings to be unpredictable, I found my home life was affected; snapping at the kids, and finding a quiet corner of the house to have a sulk when my P&L wasn’t going the way I wanted to. I don’t like being this person. While I care passionately about the markets, about Technical Analysis, and the FuturesTechs product, I don’t wish to jeopardise things that are far more important.
So my own personal journey of discovery has led me to make the firm decision that trading’s not for me, and that I am far better cut out to analyse the markets, and continue to aid real traders (who can manage their emotions!!) to trade the markets using Technical Analysis, one of the most powerful tools available to anyone who wishes to make a success of trading.
I’m happy to admit that I’m not a good trader then, which is possibly why I’m doing okay as an analyst, because there is a school of thought that a good trader will never be a good analyst, and vice-versa, just because we’re all “wired up” differently.
Next time I’m going to talk about some more technical stuff; we’ve had a few questions from readers about gaps, and how to trade them.
In the meantime if you are a FuturesTechs member and have any questions that you think would be suitable for a “public” answer then feel free to ask away!! (Click here).
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We were asked by a trader today (like we often get asked with respect to Banking Stocks) where a good place to buy Barclays would be? For those looking at this after the event let me briefly set the scene:
Barclays topped out just shy of £8 in February 2007. Last week we hit 47p, and have since bounced, failing at 117.50 yesterday (28th January). Interestingly, this was the low/bounce back in November, so we have seen an old support level turning into resistance, something us Technical Analysts always look out for, and place importance upon.
All the way down we have been asked if it is a good time to buy banks, and all the way down we’ve said “No”.
Our clients who have access to all of the media appearances and magazine articles featuring our Analysts will be well versed with our thinking, and our standard response to these sort of questions, but the reply I crafted to today’s chap caused a bit of a chuckle around the office, as well as clearly illustrating our thoughts on this question.
So I thought I’d share it with you! Here it is:
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1p is the only safe place to buy BARC!!!
Yesterday’s failure at old support at 117.50 is a clear signal that the road to higher prices is going to be a tough one in this stock.
Failing to hold £1 today is bad news, surely?!
85p-88p might act as support.
This isn’t catching a falling knife, it’s catching a falling FRIDGE.
You don’t need Technical Analysis for this sort of trade; just jump in and cross your fingers…
Casinos give you free tea/coffee/lemonade, and in Las Vegas you can even get free beer… much more fun than “trading” Barclays.
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Good luck today with whatever you decide to do, be it in the markets or down the Casino!!
Cheers,
Clive.
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