Bo Yoder S&P Update

The S&P 500 (ETF Proxy – AMEX:SPY) gapped up on Friday to close out the week near the range highs.  I believe this is day 40 without a new high or low reached which is freakishly unusual.  This weird lack of participation continues to worry me as I believe it will lead to a volatility explosion when it releases.

Morgan Stanley (NYSE:MS) has broken out above the $37.80, and has “set up”.  With stop loss orders below the $36.30 area, I will be looking for signs of loss of power or reversal patterns to take partial profits into.

Valero Energy (NYSE:VLO) is toying with my trailing stops above the $61.50 area, as it decides in what direction the next leg will form.


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The FTSE 100 rallies after Tories’ win but fresh highs would be hard to come

So the elections are behind us and what a surprise that was, the Conservatives won the majority vote but what really caught most analysts, political and financial alike, was the way they won the race. Over the past weeks almost all predictions called for a very tight race, so tight actually that no one was willing to make a bet either way. All the polls called for a marginal difference between the two front-running parties and everybody was prepared for a thriller when the time came for the exit polls.

But as everyone knows by now, the Tories emerged as the clear and undisputed winner of the election and actually didn’t even need to form a coalition government. It goes without saying of course that this was perceived as a positive development for the London money markets and the FTSE and Cable both gained the following morning.

Focusing our analysis on the London index we saw the FTSE climbing sharply above the 7,000 points after the results hit the wires after having traded below the 6,900 area in the eve of the election. The fact that all predictions called for a possible stalemate between the two major parties in the UK had scared investors away but as soon as the clear win of the Tories was a fact the FTSE jumped almost 200 points to trade just shy of the 7,100 points this morning.

However the usual question that comes to mind after such a radical move in the main index is whether these gains can be sustained and if not what’s to come. My personal opinion is a bit reserved, I think that the rally was more a knee-jerk reaction from the market participants and the real question is whether the FTSE can remain afloat above the 7,000 points. I think that this will determine whether the FTSE can really make it into fresh 7,100+ highs.

I believe it will be difficult for the London index to break into new highs this week, the index seems a bit overbought after last week’s rally and the 7,100 barrier has been rejected by the FTSE a few times already the past month. I believe that a consolidation between the 7,000 and 7,100 points levels is more likely, however should the 6,980 points’ pivot level get breached then I will be looking to short the index towards the 6,910 support floor.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.


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Uncertain election results threaten the FTSE this week

Over the past few days and since my last note to you we’ve seen the FTSE 100 taking a turn for the worse and actually breaking below the 7,000 points’ area which I called as my main support at that time. Last week the focus was on the Fed meeting and on whether the US central bank would delay their rate hiking agenda.

It turns out that the Fed preferred a more moderate language in the statement that followed their meeting and even though they acknowledged the recent deterioration in the domestic economy they didn’t change their plans. As a result the FTSE came under pressure and along with the rest of the European markets retreated lower.

Looking ahead this week I believe that the most important event will be the Non-Farm Payrolls on Friday while at the same time the UK elections could be a disrupting factor. I will approach this week’s analysis from a technical standpoint as the fundamental developments are hard to predict how they affect the London markets.

My main area of focus this week lies at the 7,000 points and I regard this level as an important pivot point. The FTSE is closed today but it will be important to see whether the index will remain afloat tomorrow and manage to trade above this key support level. If the bias pushes the FTSE higher then my first target lies at the 7,100 points barrier and it will be interesting to see whether this can be broken to the upside.

However in case the FTSE trades back below the 7,000 points and the uncertainty surrounding the domestic elections forces investors to take a defensive stance then we will most likely see the 6,900 lows of last week getting tested again. I think that it will take quite a surprise to drive the FTSE outside this 200-point range so I would prefer quick trades towards these extremes with little hopes of momentum building at least at this time.

If you want daily signals on how to trade the FTSE 100 then my newly launched Sentinel Signals™ service might be of interest to you. You can find more information on the Sentinel by clicking on this link.


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Bo Yoder S&P Update

The S&P 500 (ETF Proxy – AMEX:SPY) is pushing back up to the range highs on extremely low power.  I would expect to see this push tail off as the highs are reached, and don’t expect much energy to enter this index unless a news event can attract attention.

SPY 5-3

Morgan Stanley (NYSE:MS) is basing near highs with rising power.  I would expect to see the price breakout above the $37.80 level in the next few days, and would consider stop loss orders below the $36.30 area.

MS 5-3

Valero Energy (NYSE:VLO) is trying to work its way down to the 200 SMA (Purple line) which is my next profit goal. The bullish engulfing bar that formed on Friday’s session makes me feel more aggressive about trailing stops to above the $61.50 area

VLO 5-3


Freeport-McMoran Inc. (NYSE:FCX) has followed through nicely and is now testing the $24 per share target zone.  I would exit in full at this point as this has been a textbook hold which has now reached it’s logical conclusion.

FCX 5-3

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