Bo Yoder S&P Update

In last week’s column, I was calling for the S&P 500 (ETF Proxy – AMEX:SPY) to rally up to test the highs and offer me a short entry into a double topping pattern.

Instead, this index fell well short of the highs and actually formed a lower high!

The bears are clearly back in control of the trend and we once again stand by to watch them play chicken with the Federal Reserve.

Maybe this time things are different…My gut says yes, but I have no objective data upon which to take market risk, so I will let this index alone for now.

SPY 3-29

 

Apple Inc (NASDAQ:AAPL) has formed a complex correction and is trading down into areas of powerful support near the $120 per share area.  I will be watching for one more wave of selling to exhaust price and offer a reversal pattern into which entry could be taken.  My stop loss orders would be determined by that pattern once it forms.AAPL 3-29

Valero Energy (NYSE:VLO) is trading within the context of an extended uptrend, and is showing signs of exhaustion.  The bearish engulfing bar formed in Friday’s session should provoke a rush for the exits next week, and I would be interested in this stock as a short with protective stop losses set above the $64.50 area.

VLO 3-29

Freeport-McMoran Inc. (NYSE:FCX) finally offered its entry, and rallied up to test the resistance offered by the 50 and 20 period simple moving averages (Blue and Orange lines). I would expect to see a higher low form now and for a new uptrend to begin in earnest.

FCX 3-29

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The FTSE 100 is at a crossroads and my tactic for this week is to hunt for the breakout

This morning the FTSE 100 is trading just shy of the 6,900 points having declined heavily last week and now the question is whether the future is lying higher or lower. Last week we saw a great correction from the London index that came off its 7,000 points’ levels and broke below the key 6,900 points level.

I believe that the FTSE 100 is lying around a very interesting technical area and it will take either an upwards or a downwards break to attract investors’ attention to get behind the new move. So what are the levels that I think will be crucial to FTSE’s outlook?

In my mind the lows around the 6,840 points are the threshold for further losses to be triggered and if the FTSE breaks below them then we will definitely head for the 6,800 points and below. I am not saying that the FTSE 100 will break below this area for sure but at this time the bias seems negative.

To the upside my pivot point lies around the 6,900 area and if the FTSE is to correct from last week’s losses then a clear and decisive break of this barrier is needed. If that happens then I believe that the momentum that will be generated has the potential to take the index back to its previous 7,000+ points’ levels.

So for this week my strategy will be a simple breakout tactic, I am looking for the index to break out from its current range and I will let the market’s price action show me where the FTSE is headed and the momentum from the move will lead me towards my aforementioned targets.

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alpesh

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The S&P has rallied up and is trying to test the all-time highs

The S&P 500 (ETF Proxy – AMEX:SPY) has rallied up and is trying to test the all-time highs but has so far failed as power is lacking in the markets.  This low momentum movement is indicative of a breakout failure, which has been my forecast for some time.

If you have a portfolio of long term holdings, this would be an excellent time to reduce bullish exposure, as this price behavior can lead to a major top for the markets.  I will be looking for a chance to take short exposure if/when the double topping pattern can be fully expressed.

SPY 3-23

 

 

 

 

 

 

Sprint (NYSE:S) has failed to react with any passion to the support offered by its daily 20 SMA. (Blue Line).  With the potential top in the overall markets, I think the odds for a higher high have shifted away from this position and would take the remaining profits at this time.

S 3-23

 

 

 

 

 

 

The chart of Freeport-McMoran Inc. (NYSE:FCX) has been taking its time in offering an entry.  The double bottom scenario is playing out now, but the bullish engulfing bar that formed on 3/18 failed to “set up” by breaking above the trigger bar’s high.  Another valid candle was formed on Friday, and I hope to see a set up for this long in Monday or Tuesday’s session.

FCX 3-23

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Is the FTSE 100 seriously capable of breaking into fresh highs?

After a couple of strongly bullish weeks the FTSE 100 is now trading steadily around the 7,000 points’ area having broken above its previous highs located more or less 100 points lower. What has pushed the FTSE to such fresh highs has been the doubts on whether the Fed and the BoE are seriously considering a change towards a higher interest rate policy over the foreseeable future.

After the recent developments mainly across the Atlantic it is now clear that the Fed is not in a hurry to hike its key interest rate and as we already know the Bank of England would want to wait for their American counterparties to pull the trigger first before the do so themselves. So this recent twist of events pushes any chance of a tightening the domestic policy even further into the future and this of course translates into a bullish bias for the London benchmark.
However now that we’re already trading slightly above the 7,000 points’ barrier what should we expect for the coming week? I think it will mostly come down to the two inflation-related reports from the UK and the US scheduled for release tomorrow. A bullish printing showing that the inflation levels in the UK and/or the US are ticking higher could be translated as a sign that a rate hike is more likely to come soon whereas a stubbornly low reading would point towards the opposite direction.

From a technical point of view I think that the pivot point for the FTSE 100 lies at the 6,950 points’ level and any breach to the downside would expose the 6,900 and 6,850 points’ areas.

For that to happen though a seriously better inflation reading would be required, one that would renew the market’s faith towards a change in the monetary policy domestically and abroad. In the opposite case we could see the FTSE 100 breaking into new highs while the present accommodative rate policy from the BoE lasts.
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alpesh

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Fresh highs for the FTSE 100 but momentum seems to be fading away

It seems that the FTSE doesn’t want to abandon its current uptrend and is trying to hold on its recent gains around the 6,950 points’ area. During the previous week the London index managed to remain afloat and resisted any pressures to the downside so the outlook for the days ahead is kind of mixed.

On the one hand there’s the scenario that the FTSE 100 will continue higher and make its way to the 7,000 points’ barrier boosted by the better than expected performance of the domestic economy and Fed’s intention to resist changing the interest rate policy in the US. Don’t underestimate the importance of this development as the US indices usually drag the rest of the stock markets along.

On the other hand though there’s the idea that the FTSE 100 has run an impressive rally again and with the BoE policymakers discussing a sooner-than-later decision on raising their rates a decline is coming. And such a development will undoubtedly reverse the FTSE 100 towards lower levels.

Personally I believe that there’s more chance of that happening rather than another extension of the rally to the upside. And I say that based more on the technical side of things as a correction seems more likely at this point with the momentum of the previous uptrend having diminished significantly. I believe that the pivot point at this time is located around the 6,900 points and a break below this area should open up the 6,850 points support.

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alpesh

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The S&P 500 remains unstable with low levels of liquidity

The S&P 500 (ETF Proxy – AMEX:SPY) remains unstable with low levels of liquidity intra day, and I would continue to urge caution if you are trading this index.  There is a credible top showing on the daily chart of this index, and we are hearing this week that one of the major drivers of this latest bullish move are stock buybacks from American corporations which are being fueled by debt issuance.

Let’s think about that for a minute…when a company expects a better return for its shareholders by buying its own stock “on margin” (debt fueled leverage)to drive up share prices than selling its goods and services we are in a state of serious malinvestment.  If you told me this would be our markets 5 years ago, I would have laughed in your face, but that is our reality today.

SPY 3-1

 

In spite of the inversion of common sense when it comes to so many things, there is still a LOT of opportunity for the active trader out there in this environment.  Sprint (NYSE:S) completed its pullback, and triggered on a break-away gap last week.  It closed just short of its initial profit objective, and I still expect to see good things from this stock in the week to come.

S 3-1

Pfizer Inc. (NYSE:PFE) offers yet another teachable moment on how important it is to have consistent filters in your trading plan to force the markets to “behave” before you put your capital to work.

Last week I wrote that I was expecting the bullish engulfing bar on the daily chart to act as confirmation, and trigger an entry IF its highs were violated.

This filter kept me on the sidelines, and thus avoided a false setup.  Then, the stock formed another valid entry pattern as it left a bullish engulfing bar on the charts on Wednesday.

This bar also acted as a valid filter, as the price action on Thursday and Friday failed to “Trigger” the trade by breaking out above the reversal candlestick’s highs.  Now, it seems that price will drift down to test the support offered by the 20 period simple moving average (blue line), and I will continue to monitor this stock for a new valid reversal candlestick on the daily level.

PFE 3-1

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