Bo Yoder S&P Analysis

The S&P 500 (ETF Proxy – AMEX:SPY) continues to whipsaw as the Fed’s rate shift has caused a great deal of liquidity to slosh through the markets.  The odds picture remains muddy on a daily level, and there is still too much hidden bullish power for me to be comfortable putting my short exposure back on at this time.

SPY 12-19-15

Intel (NASDAQ:INTC) has formed a classic pennant breakout pattern on its daily chart.  Normally, this would be a bullish entry signal. However, 3D Apex Predictive Failure Technology™ is showing me that this pattern is likely to fail.  This offers a short opportunity as the longs enter into this trade and get stuck.INTC 12-19-15

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David Paul: Redrow (RDW.L)

Redrow (RDW.L)

The builder Redrow features prominently on the Stock Viewer on VectorVest. The Stock Viewer sorts and ranks all of the shares on the London market by the highest combination of Value, Safety and Trend (VST). The chart of the share over the last year is shown below.

davidDavid Paul uses VectorVest Charting Software

RDW.L is undervalued by the market with a closing price on Friday 17th of December of 456p while the VectorVest valuation is 746p. As a default I like to invest/trade in undervalued shares and RDW passes this test easily.

Both Earnings potential and Earnings safety (RV and RS) are both ranked as excellent with values on a scale between 0 and 2 of 1.55 and 1.42 respectively. That’s another tick on my checklist.

On my default chart layout which shows the price, value and Earnings per Share growth (EPS) I observe that EPS is growing strongly and over the last year the plot runs from the bottom left of the chart to the top right with little volatility. That’s another tick on my checklist.

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The technical position of RDW looks very sound. The share is in the throes of a long term bull trend which is measured on VectorVest by the Comfort Index. This tool looks at the trend and the volatility of the trend over the last 3 years. At a level of 1.5, again on a scale between 0 and 2, this long term trend is ranked as very strong.

Over the last few months RDW has traded within a pennant formation. If you carefully draw a trendline from the annual high in September 2015 to the high at the start of November 2015 this consolidation is relatively easy to see. It looks likely that this trendline has been broken to the upside at the start of December 2015. During December the share has pulled back and “kissed” the trendline and over the last few days found support at the trendline. In a down day on Friday RDW held its ground and was up a handful of points on the day.

Many will wish to wait until the 1 year high at 5 pounds is broken before considering an entry but with a positive general market I favour preceding the breakout with a small position and then adding as the 1 year high is broken.

There are a lot of ticks in RDW but the general market is far from positive. The advice on VectorVest is caution. The underlying trend is down and the DEW and longer term Confirmed Call techniques are also pointing down. The general market is 70% of the exercise so my advice is to stand aside until that picture changes. The front page of VectorVest will show that clearly.

On the international markets the Dow had a strong down day and fell to short term support. This is a very important level and marks the conclusion of a 5 wave triangle which I have labelled as a wave 4 of the up wave which started after the Chinese drama of the summer on the 24th August. The fall on Friday was caused by Oil and Oil stocks. The perception in the market (according to Bloomberg) is that the fall in Oil will cause a big percentage of Junk bonds to default.

I have held most of my stocks and only disposed of the laggard during the week. Savills has done nothing for me over the months I have held the share. Getting rid of the worst performer each month is a practice that was taught to me by a very successful SA based investor. It automatically instills trading discipline. BPI.L tested my heart during the week with a plunge but now it’s over that adds to my enthusiasm for the share. Over and over again we see evidence of plunge down and reversal preceding a strong move. Have a look at the chart of JD Sports just prior to its big move up in 2015 for a great example.

Carnival had a good day on Friday and may have (at last) broken from an ascending triangle formation. Fridays outside day bar chart pattern normally causes follow through so with any luck (and a decent market) we should see follow through on Monday.

In conclusion I still believe that we are in a bull market but it’s a very mature bull market. The 17000 level of the Dow is very important and a break south of that level will take the Dow down to 16000. On the LSE we have lots of undervalued shares that have strong earnings potential and safety but the direction, momentum and especially the breadth of the overall market is exceptionally weak.

Watch existing positions carefully. Don’t give back any more than 50% of my profits and stand aside from taking any new positions is what I intend to focus on until the front page of VectorVest tells me differently.

David Paul

December 18th 2015

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Charlie Burton on Forex

What I love about the markets is that everyone has an opinion. We all like to think that we are right about where we think a market is going next and yet we can’t possibly be right all the time, no matter how good we are (hence the necessity for using stop losses!). There’s probably no better example in 2015 of where everyone had a similar opinion as on the Euro/Dollar earlier this year. If you can recall back to March when the Euro was breaking below 1.05, most commentators were all in agreement that it would soon be visiting parity.

eurochart1

We all know that didn’t happen and the market ended up rallying to 1.17 over the following months(see first chart). Then once again in mid October, the Euro started breaking down and by early December it was back in the 1.05’s and the majority were calling for a swift move to parity once more, only to witness that huge rally on ECB day that produced the largest one day rally since 2009 I believe.

So here we are again, at a crossroads with the majority opinion favouring a downside run that will take the Euro to parity next year. Fundamentally this should indeed happen but as technical traders, we always have to see both sides of the story. As we approach Christmas, I will pose just one scenario to you. Looking at the second chart you can see the most recent high made this month at around 1.1050. If the Euro did for some reason break above that, I would be looking for a move with the potential to run towards the previous resistance zone around 1.14.eurochart2

It looks unlikely right now, but hey, it’s just opinion…..

Charlie Burton is a co-founder of the Ezeetrader community offering education, newsletters and updates for reakl traders.  Join Charlie and his partner Kym Watson for 2 free days access to their live trading room.  Please contact sam@ezeetrader.com and quote ‘Round-the-Clock-Trader‘.

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A Sea of Red

A SEA OF RED

The London Stock market had a poor week with all the VectorVest Market Timing Systems from short term to long term recording a sell signal after the close on Thursday evening.

From a conventional charting aspect the UK Composite has broken south from a 5 wave continuation pattern which chartists would refer to a “bear flag”. Its pointing to more downside on Monday and all reading (including myself) need to be very careful with open profits. Remember NEVER let any more than 50% of your profits slip away and watch those darn stops carefully. The target calculated by conventional charting techniques from the flag is a long way south. The chart of the London VectorVest Composite is shown below. The RED triangles show the most long term signals on VectorVest known as “confirmed calls”.

david

The cause of the selloff is a combination of many things. The looming US hike in rates, oil price and its effect on oil and energy stocks, iron ore price and a meltdown in South African dual listed counters.

My portfolio is holding its own with a great day on Bellway and a positive day in Howden. I will watch the open carefully on Monday morning but at this stage feel I will raise cash on most of the portfolio and chill over the holidays until a new series of BUY signals appear. Remember no one really knows what’s going to happen next and all we can do is to closely follow our edge. My edge is to be invested in undervalued stocks that’s are growing earnings aggressively and safely (RV and RS) that are rising (CI) when the market is rising. The shares in my portfolio are all positive by RV, RS and CI but the as stated above the overall market is falling and that’s 70% of the exercise. This is not the time to be emotional.

On Tuesday 15th December at 200 PM UK time I will be speaking at the Round the Clock trader and for new readers will define the VectorVest metrics of RV, RS and CI in great detail. The link to the webcast is included here.

https://attendee.gotowebinar.com/register/365906845237233409

The Copper price has found support at the confluence of an equidistant channel and a 1.618 extension of the last weekly range. This barometer of commodity prices has been on this support level for 4 weeks. Two weeks ago Copper charted a “Doji” candle or an indecision candle and is still trading within the range of the Doji. I would like to see a weekly close above the high of the Doji to confirm that a bottom is in place. Once confirmed this should start at least a bounce in commodities and should be an excellent trade for the brave. Stand aside in my view at the moment.

The Oil price has been falling all of last week and I am glad to report that I managed to get some of that move. I was long for a few weeks at 40.5$ but as reported here got stopped at entry. I switched to short on Monday last as the oil market broke down through last week’s lows.

Chartists looking at the Oil market over the last year should observe a “falling wedge” pattern which is nearly complete. The lower line defining the wedge shows that support in Oil should arrive at around 34$. This is also a confluence of a 1.27 extension of the last daily range and that’s a common feature of the falling wedge or “3 drives” pattern. A falling wedge is a bullish pattern and they have been very good to me over the years.

Although the signals need confirmation we may be close to the bottom in both Oil and Copper. Stand aside and let the dust settle would be my advice for now. I shall detail the patterns in the webcast on Monday afternoon.

Our Job is to find the best very stocks that suit our level of risk and then to manage then well. We have the most magnificent and 26 year tested edge in the VectorVest program and it’s now up to me to follow the rules without emotion.

That’s Monday morning’s job.

David Paul

Click here to take David’s 5 week course including access to VectorVest UK & US

December 12th 2015

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Charlie Burton on Gold

I haven’t written for Simon in quite some time due to my own failings for contributing material regularly! Anyway, it’s great to be back and my aim each week will be to look across the markets and identify something that has interest to me, and thus hopefully it carries some interest to some of you…

This week, I’m looking at Gold and some interesting developments that may transpire over the coming weeks. If we look at the weekly chart, there’s a few technical aspects that are interesting to me. Firstly, every time it makes a new low, it’s only been marginally breaking the previous low before performing a retracement rally. In my view, a market that follows this pattern is a market that may be running out of steam, in this case to the downside.

Also, at the last low two weeks ago, gold turned up and gave a ‘key reversal’ week. This is where price makes a new low below the previous bar and then closes above the high of the previous bar. Key reversals can be a good indicators of an impending change against the trend looming. They don’t necessarily mean a complete change in trend but are certainly worthy of our attention.

Another observation I’ve made on this chart is the 50 moving average which is the black line. Price keeps moving back up to test it before being rejected but when its rejected, it never moves that far away before bouncing once more. So in light of what I’m seeing on the weekly timeframe, if gold can break above the high of the key reversal week, it could develop into another counter trend rally which could see it move ultimately back towards that 50 moving average.

The caveat is if it doesn’t break that high and starts to move lower, the pattern will be void if the low of the key reversal is broken. For now though, I like the overall pattern and am watching to see if it develops into a tradable opportunity on the long side…..

charlie_weeklygold

Charlie Burton is a co-founder of the Ezeetrader community offering education, newsletters and updates for reakl traders.  Join Charlie and his partner Kym Watson for 2 free days access to their live trading room.  Please contact sam@ezeetrader.com and quote ‘Round-the-Clock-Trader‘.

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Bo Yoder S&P update

The S&P 500 (ETF Proxy – AMEX:SPY) has fallen victim to a series of political news events which have overwhelmed the selling pressure that we have been forecasting would turn the market.  You can see how the bullish movement stopped dead as seen as it entered the red zone, but did not reverse.  This shows that there was added political buying pressure that was there to balance out and “prop up” price.  This tight, sideways action is rare enough in individual stocks, but this is literally the first time since the mid 90’s I have seen this action in a broad market index.  This environment greatly weakens the odds making process and leads me to believe that we are now poised to break out to new highs in an attempt to punish the bears.  If this occurs, it will trigger a euphoric rally that well lead us to the next major top.  I would scratch out of shorts at this time and take a more defensive posture as we wait for the “Santa Claus Squeeze” to unfold…

spy12-7-15

Timken Roller Bearing (NYSE:TKR) rallied slightly the day after I suggested scratching, and you can see how would have given back profits every day since.  This failure was forecast before anybody got stuck which is where the term Predictive Failure Technology™ gets its name…

tkr12-7-15

APPLE Inc, (NASDAQ:AAPL) also stopped dead at the lower edge of our forecasted red zone, and has been in stasis ever since.  I believe that the recent power flip is part of this political squeeze that we see coming in the broader market indexes, and believe it is time to be in 100% cash as we wait for the “other shoe” to hit and indicate to us where the next leg in price is headed.

AAPL 12-7-15

 

To learn more about 3D Apex Predictive Failure Technology™, the engine that drives these forecasts, please visit http://themarketdoctor.com or for our latest public service announcements visit https://plus.google.com/+RbjfinancialgroupAlerts/posts

Bio:

Bo Yoder is a two time author, professional career trader, author, and consultant to the financial industry on matters of market analysis, trading and risk management.

He has an MBA from The Boston University School of Management

Bo has been a featured speaker internationally at industry expos and has developed a reputation for the ability to trade live in front of an audience as a real-time example of what it is like to trade for a living, using a real money account.

During his focus on trading in real-time, he simultaneously talks the audience through his thinking, analysis, and a moment by moment walk-through of what is evolving and the actions he’s taking until his trade has resolved.

In addition to his two books for McGraw-Hill, Mastering Futures Trading, and Optimize Your Trading Edge (translated into German and Japanese),  Bo has written articles published in top publications such as TheStreet.com, Technical Analysis of Stocks & Commodities, Trader’s, Active Trader Magazine and Forbes to name a few.

An active trader since 1997, Bo came out of retirement to partner with the creator of 3D Apex Predictive Failure Technology™,  Roger Khoury in 2011 and is now the Head Trader and portfolio manager for a boutique private money management firm, RBJ Financial Group

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US Rate increase looks certain

Stock markets were very disappointed by Maria Draghi on Thursday and vented their frustration in the only way they know. Stocks fell hard while the Euro gained, moving from 1.05 to 1.10 $ to purchase a single Euro. That won’t help the Euro economy much and I suspect that strong German hands were involved in watering down any of the promised stimulus.

Today the NFP jobs report as predicted by the ADP report on Wednesday exceeded expectations. The report today showed that 211000 new jobs were created and that’s on top of the 298000 created last month, which was also much bigger than anticipated. In response the Dow has climbed over 300 points and has reclaimed most of Thursday fall. The SP500 a broader measure of the US market charted a similar move but the Russell 3000 rallied a smaller amount.

The FT100 didn’t participate in Friday US move upward move with the VectorVest Composite falling both day over day and week over week. This has printed a red light on the price column of the Color Guard. Both Primary and Underlying trends are down and VectorVest does not recommend buying any shares at this time. The most conservative signal on VectorVest the “Confirmed Call” has ridden out the selloff over the last two days and remains on a BUY and does the DEW Market Timing System. A very mixed bag.

There is no respite for commodity shares as the iron ore price fell below 40$ per ton. Anglos iron ore subsidiary Kumba needs a price of 50$ to turn a profit and with woes at DeBeers as well, Anglo looks likely to pass on its dividend. BHP and Rio Tinto can make a slight profit at 40$ according to Investec. The copper price remains on support as defined by the channel that’s been in place during the rout in price over the last 5 years. I am hoping that we will see a bounce at least from here but am wary of the “falling knife” metaphor. It’s still early in the cycle to get involved in commodity based shares and suspect there needs to be much more pain before a bottom is in place.

I am sure that the US NFP report will be all that Yellen requires to action the first upward move in US rates since 2006.This will put the US on a sharply divergent path from many other advanced nations. Although the ECB didn’t make markets happy on Thursday the bank still intends to print 60 billion Euros per month for at least the next 6 months. I suspect that the trend downwards in the Euro$ will reassert itself sometime soon.

My stocks have had a good week with Bellway, Avon, JD Sports, Howden, Go Ahead and Greggs advancing even during Thursday’s general market selloff.

JD seems to have broken upwards from slumber as the probabilities favored. The share is undervalued and growing earnings both aggressively (RV) and safely (RS). The share is in the throes of a strong trend as measured by VectorVests secret weapon the Comfort Index. This combination of strong earnings growth and strong trend, finds outstanding shares with enormous risk to reward ratios. JD has been very profitable over the last year and with the breakout seems certain to get much higher.

Dr. Bart DiLiddo, the founder of VectorVest words echo often in my ears. He says it’s our job to find the very best shares and then manage them well. For me the combination of an undervalued share that’s is growing earnings strongly whilst in the throes of a strong trend finds these easily and without effort.

On Unisearch within the VectorVest program this is done with a few mouse clicks. Here are the Unisearch settings

 

  1. RV>= 1.4
  2. RS>=1
  3. CI>=1.4
  4. Value/price>=1

These shares are then sorted by the standard sort VST (Value, Safety and Trend).

If you have any problems inserting these values or if you would like to test VectorVest then please call the help line on 0800 014 8974 in the UK and 0800 981 891 in SA.

I then “Cherry Pick” the top shares found by the search by eyeballing the chart. The process is detailed in chapter 4 of the Quick Start course which is a part of the VectorVest program but in brief the following is the process

  1. Over the last year the share price is rising with little volatility. The CI assures that the trend over the past three years is strong and thus needs little scrutiny.
  2. The share is trading below the VectorVest valuation. The more undervalued by the market the better.
  3. The VectorVest computed Earnings per share (EPS) is rising steadily from bottom left to top right of its part of the computer screen. I have found that a smoothly rising chart of EPS over the past year greatly increases the probability of a positive and winning trade.
  4. I like to see a share like JD Sports that fulfills all of the above but has traded within a consolidation pattern such as a rectangle or triangle for a few weeks. If I observe a consolidation (such as the one on JD Sports) and within the consolidation the EPS is rising, then the probabilities strongly favour a positive breakout.

That’s what happened at JD Sports and it’s why I bought into the share a few weeks ago.

The chart of JD Sports is shown below.

david 7th dec

 

If you follow the above template you will find trading a very rewarding pursuit. Clearly there will be losers and that’s why money management is vitally important. The simple key here is to risk only 1% of your bank on any single trade. This means that the difference between your entry point and the VectorVest calculated stop loss in pounds should represent 1% of your account.

Watch stops closely as the underlying trend is down and don’t ever give back more than 50% of your profits on a trade.

Trial VectorVest – click here

David Paul

5th December 2015

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