History for the Coming Week and the June Market
According to the UK Stockmarket Almanac, the coming Week (w/c 23rd May 2016) is Up for 41% of Years with an Average Return of MINUS 0.3% - so the Historical Precedent is weak.
As we are nearing the end of May, I thought it would be worth looking at the Historical Returns for June. I wish I hadn’t looked - it turns out that June tends to be worse than May and is the 2nd Worst Month of the Year (May is the 3rd Worst and the Worst is September). June has been up for 38% of Years with an Average Return of MINUS 1.0%. In fact, it has got worse since 2000 with an Average Return of MINUS 2% and in 8 Years since 1982 the Market has fallen more than 3%. June tends to start strongly for a few days and then it all slides !!
So, even without a Brexit Vote, June has a very poor record. I will be keeping my tatty Shorts on………
The Chart below from the marvellous ShareScope as usual, shows the FTSE100 Daily Candlesticks for most of 2016 so far. The first thing to look at is how the Price has got out of the Blue Parallel Downtrend Channel Lines that I have shown for a coupe of weeks - this is a Bullish development but it is worth noting that the US Markets are still within a similar Downtrend Channel - as we will see on the S&P500 Chart in a bit.
My Black Arrow is pointing to a big Up Candle from Friday 20th May 2016 - this pretty much reversed all the Losses from the Thursday before but note how the Move Up was capped by the 200 Day Moving Average (the Faint Blue Wavy Line thing) at about 6160. Note also that the 50 Day Moving Average (the Darker Blue Wavy Line) is up at about 6200 and may act as another Level of Resistance to a move upwards.
I think it was last week that I suggested a possible Range between the Green Horizontal Lines on my Chart - this still seems to be playing out give or take a few points at either end.
This latest Death Cross is still in force and so far is proving very prescient.
I still get the feeling that the recent moves are a Move Down for 3 Weeks, followed by some Sideways Consolidation (we have had 2 Weeks of this) just before another Leg Down.
The Chart below has the Daily Candles for the S&P500 for most of 2016 so far. As I hinted above in the FTSE100 bit, the S&P500 Price is still within the Red Parallel Lines Downtrend Channel (marked with my Red Arrows) - this is the dominant feature here.
My Blue Arrow points to the Up Candle which was generated on Friday 20th May 2016 - note the ‘Wick’ or ‘Tail’ up above the Candle Body which shows that the Price fell back by the Close of the Day and couldn’t hold the Intraday High at 2058. This shows a lack of Strength but also 2058 is up at Resistance from the 50 Day Moving Average, which is the Darker Blue Wavy Line.
Not much has changed on this Chart from recent Weeks really. The Dominant Feature is the Blue Parallel Lines Uptrend Channel and the Price is still nicely within these confines. Obviously the Price needs to get over $50 Resistance just up above and then $54 will be a tough challenge to get over. On the Downside, Support at $47 and $46 etc. will kick in to keep the Uptrend going I suspect.
Following on from last week, my Chart keeps the Black Line (marked with the Black Arrow) and the Red Line (marked with Red Arrow) which form a Triangle within which the Price was moving. You should see that the Price got up above the Black Line earlier in the Week but then fell back within the Triangle. This Triangle is still valid really and we are at a Key Juncture - either Support from the Red Line at the bottom holds and it tries again to breakout of the Black Line to the upside, or the Red Line Support Fails at about $1243 and we go lower.
However, even if the Triangle does break to the Downside, all is not lost - there is a lot of Support around $1230 to £1200 ish. Note the Price is currently sat on the 50 Day Moving Average (the Darker Blue Wavy Line) at about $1250 - this could act as Support.
As I mentioned at the start, I cannot see the Indexes making much headway before the Brexit Vote, and I expect the next few Weeks to be pretty tedious !! I hope everyone can stay awake and find useful Research / Learning etc. to fill the time - no point in Trading for the sake of it. Go and dig through my Blog Archives - that will keep you busy and off the Streets.
Best Wishes to all, WD.