Goldman reports today

Revered and reviled in equal measures, the mighty Sachs reports its Q2 later today. The blue bullish support line is still in tact but this chart does not look bullish overall. One of the drawbacks with daily closing P&F's is that they provide guidance but are not great for short term trading. By the time the 45 degree bullish support line is threatened around $100, the price would have already halved! To trade more actively, you can use 1minute, 1 hour, 4 hour P&Fs.

All that said, we are looking for directional guidance here and I say lower - recent support at $150 has been broken. The filling of the $145 box gave a double bottom sell signal. The 'shape' of this chart does not currently provide for any upside price objectives. To the downside, we now have an activated price objective of $70, no time horizon. If the results surprise to the upside and we get a 3 box reversal today and a new up column of x's (would require a move of $15 to fill 3 boxes), the next (unactivated) target (from the last column of nine 0's) would be in the order of $45.

Nikkei update

This is one market I never invest in, not for clients, nor PA. Yes there have been some spectacular bounces but how many false dawns too? How many times do you hear Japanese equity fund managers boldly proclaim that 'this will be the year that we see recovery in Japan'?? I first heard it from and old Save and Prosper fund manager back in 1995! Who would want to be a long only Japan equity fund manager??

Anyway, the chart below shows that the recent support at 9,500 has been punctured, as has the blue bullish support line. The market was down 277 points Friday at 9,408 - this is a 100x3 (ie 300 points) chart so we did not get a 3 box reversal and a new column of 0's. The index is now honing in on the longer term support at 9,100, levels where the market has held on two previous occasions. If that box gets filled, we will have a new double bottom sell signal from the previous column of o's and an activated downside price target of 7,200 (as always, no time horizon for this).

This 9,100 level (shown by the larger red circle) looks very important - expect a battle here between bulls and bears. If we see a drop below it and the 9,000 box gets filled, that would be a bearish development, as those two previous support levels would be punctured.

There is also an activated downside target of 5,900 still in play and an upside target of 14,500 (but that will become invalid if the 9,100 box gets filled). I would suggest more risks to the downside at this particular juncture because the bullish support line has been breached and we now have the more recent bearish resistance line, just my opinion but keep an open mind. Japan - its a 'killer'!

Flight of the IBEX?

Its been a good month for Spanish sport (Spain in the World Cup, Nadal at Wimbledon, Jiminez in the French golf) and the IBEX has also posted a very strong recovery. On the 100x3 (close) chart, a double top buy signal was recently given at 10,100, with an activated upside target of 12,600!! No time scale and clearly several downside targets in play but that's what the chart is saying. Note however that the index will have to push through the looming red bearish resistance line. Further good news on the economic front, successful rollover of existing debt, successful new debt issuance, GDP recovery in Eurozone etc will be needed to push this higher.... Oh well, at least they are good at sport!




The 25x3 has far too much noise in it for my liking but the recent price action and upside target is the same

Is it the

FTSE 100 update

Like many indices the FTSE 100 was probably due a bounce following the recent selling pressure and the rally has been impressive. See on this 50x3 chart below that the market has filled the 5,250 box, the place where previous resistance was met. The downside price objective of 3,850 is still active, with no obvious upside targets just yet. The current up column of x's will create an unactivated price target once it reverses, so i'll keep an eye on that one.

SPX: Slow Stochastic suggest more upside

A slight departure from the P&F's which I must update soon. The pattern resonates with 2007 but the slow stochastic suggests this bounce may have a bit further to run. The Proquote charting tools aren't the best. I'm using a log scale here and 50/200 day EMA's. Note the much vaunted death cross hasn't quite happened on this one. Either way, i'd expect resistance up to 1,100, as some of the more recent dip buyers use this rise to cut losses or get out at breakeven.

17th June 2010: double top buy signal on FTSE 100

And there we have it! Following on from the previous update, the (25x3) FTSE 100 chart now shows that the box of 5,225 did close, giving a confirmed double top buy signal and an activated upside price objective of 5,700. That gives about 6% upside from current levels and given that BP's shares could put in some sort of rally following yesterday's dividend suspension, that target could be met quite easily. Still lots of headwinds (and is a 6% gain worth the risk) but this is the new upside target.

Should the index move back up towards the previous high, we could see some sort of double top formation similar to that seen in the summer of 2007. At a fundamental level, the question remains what catalysts are going to push these equity indices up to new multi year highs?

FTSE 100 update

The 25x3 chart for the FTSE 100 is (currently) showing a clear bias to the downside. I'm slightly wary of high poles and its a measure of the way the market has behaved this year that the gains of Q1 and early Q2 have quickly evaporated. A double bottom sell signal was given initially when the market closed below 5,125 and filled the 5,100 box. The horizontal line shows the down column taking out the previous high pole of X's. The activated price objective is 3,875, no time scale for this. We would need to see some consolidation around current levels, a 3 box reversal giving a new column of X's and a move back above 5,225 for a double top buy signal to be given.

The long term bullish support line for the FTSE 100 remains in tact. This blue line is a shorter term support line and is in danger. Note the previous support at 5,050. If the FTSE is to push higher, this line must be held. Notwithstanding the recent rally (as evidenced by the last column of seven X's), a triple bottom sell signal was given when the FTSE closed below 5,000 and the 4,950 box was filled. Activating a price objective of 3,550, no time scale. This target will remain in play until the market gets back above 5,800.