My own view is that QE and NIRP are idiotic beyond belief and ultimately we are in for a serious Economic Shock - I will go into this more in coming Blogs no doubt as I have already written a draft one about NIRP and its likely consequences.
According to the UK Stockmarket Almanac, the coming week is Up for 58% of Years with an Average Gain of 0.2% - so it looks a pretty flat week historically. Note, Friday 18th March is ‘Triple Witching’ Options Expiry in the US which often causes some crazy swings on Friday afternoon. Readers and Twitter Followers may know how I have very little regard for Fridays - I find them very bizarre and unpredictable and I think they are better spent down the PUB doing serious research. It is very rare for me to do any Buys or Sells on a Friday.
For a typical March, the Week after (commencing 21st March) is historically a poor Week and finishes with Good Friday on the 25th March - with the End of the Tax Year and stuff I suspect we might have a couple of soggy Weeks ahead - obviously they are two short Weeks as Easter Monday is on the 28th March.
It struck me that when I look at Investors Chronicle in the ‘Companies’ bit at the back, so many of the Charts look ropey - the obvious conclusion was that maybe the recent Recovery in Stocks has been very confined to just a few Sectors - things like Mining and Oil really. I also got the impression that Defensives like Tobacco had done well recently.
Anyway, I have not had time to do this in any detail, but out of 37 Sectors that I have set up on ShareScope for the FTSE350 - 13 of them are Up for the Year and 24 are Down for the Year - so it does look pretty uneven and the Recovery doesn’t look particularly widespread. It might be an interesting thing for Readers to look more deeply into.
The Chart below from ShareScope has the FTSE100 Daily Candlesticks for about the last 10 months. The key element here is marked by my Green Arrow and is the falling Blue wavy line which is the 200 Day Moving Average - we need this to at least level out to be really sure a durable recovery is on the cards.
My Black Arrow points to the darker wavy Blue Line which is the 50 Day Moving Average - this is still falling but seems to have flattened out a bit recently - we really need this to move up and cross the 200 Day from underneath to give a ‘Golden Cross’ - that really would be something to get the Bull Horned Viking Helmet out for.
Note how we broke-out of my Red Downtrend Line (marked with the Red Arrow) about 8 days ago (my Blue Circle encapsulates this movement) - however, we have had a Pullback since that and gone below the Red Line again - but we closed Friday above it. We really want to see a sustained move up and away from that Red Line - at the moment, the Jury is out and it could just be an ‘overshoot’ rather than a proper Breakout.
Note the Resistance just above at 6216 - this is the first level to crack through. After this, there is a lot of Resistance above - particularly at just under 6300 which is the 200 Day Moving Average and then up to about 6500 which forms a wide Band of Resistance.
I fancied bunging in some Charts of the DAX - the main German Index. My Chart below has the long term view from back to 2008 ish - as you can see it is has really been a pretty decent Uptrend - but we did violate the Bottom Line earlier in this year.
Note the Red Horizontal Line at 10000 - this is a key Resistance Level that needs to be cracked. Equally, the Price Line needs to get over my Blue Downtrend Line marked with my Blue Arrow - around 10400.
The Chart below has the Weekly Candles over about 8 months or so for the S&P500 which is the most relevant US Index in my view. Note the falling 200 Day MA line marked with my Green Arrow and the falling 50 Day MA marked with my Red Line. You know these are not good.
My Red Circle marks a huge area of Resistance stretching from about 2040 to 2120 which will most likely be very difficult for the Price Line to wade through - something to watch.
My Black Arrow marks the very strong Up Candle we had on Friday - note this is up against the 200 Day MA and once it cracks that, it has to contend with my Purple/Mauve ish Downtrend Line (marked with a similarly horrible colour Arrow).
The screen below in the bottom window has the MACD for the VIX Volatility Index - this moves Inversely to the S&P500. My Black Arrow and Blue Arrow are pointing out that we are near a Bullish Cross - if this happens, then the VIX might rise which would mean that the S&P500 might fall.
The screen below has the Daily Candles for Brent Crude Oil going back about 7 months. Note the falling 200 Day MA marked with my Blue Arrow. My Black Arrow points to the 50 Day MA which has stopped falling and has levelled off and started to turn up - this is promising but we need a 50 / 200 Day MA Golden Cross here to really get more confidence that the Bearishness is over for Oil. That still looks some way off at the moment.
My Blue Line marks a possible Bottom Line for an Uptrend Channel which might be forming - I have drawn a possible Upper Line for such an Uptrend Channel in Green. If this does come to fruition, then the Price is up near the top of this Channel and at best it might just go sideways for a while - at worst it may drop down to the bottom of the Uptrend Channel. This is mere conjecture as we do not have enough decent reference points yet to really draw a confident Uptrend Channel.
My Black Circle marks an Area of Resistance that will need to be cracked - this is roughly $46 to $54. Note also the Level of $41.5 which is the next hurdle for Bulls to get over. The 200 Day MA is at about $46 and this will most likely be tough resistance.
The Screen below has the Gold Daily Candles for about the last 5 months. Note that $1284 is now the Key Resistance Level to get over. The Price broke up out of my ‘Pennant’ Triangle thing (The Black Lines) but it has failed to really run up as you would normally expect - it really needs to get a grip and crack that $1284 Level.
My Blue Arrow points to an Inverted Hammer from Friday - this is a much better example than on the Brent Oil Weekly Chart - although the context is not so clean as ideally you would want several clean ‘Up’ Days beforehand for it to be a really good Bearish Reversal Signal. However, this hints that the Price will fall most likely fall in the short term now.
Right, that’s your small onions for tonight, good luck for the coming fun-filled days !!