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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