After a very good run following the awful start to 2016, Market in general look a lot weaker now although maybe the US looks stronger - in a way this is not a surprise as historically last week has been one of the worst for the Year for the FTSE100 and this may simply be an effect of the April 5th End to the Tax Year.
April is historically the 2nd Best Month of the Year and is beaten only by December. The FTSE100 is up in April historically for 71% of Years with an Average Return of 1.8% - so we could have a good month to come although of course this year the Brexit Vote might be a factor - sooner or later this will come firmly within the Market’s vision I expect.
First off, I want to show this Chart which is similar to one I showed last week (I think) - this is the FTSE100 Daily Candlesticks over the last 4 months ish - the key thing here is that I had drawn in the Black Lines forming a Triangle over the last 3 weeks or so - the point is that this Triangle seems to have broken to the downside with the Big Red Down Candle from Thursday 24th March 2016.
My Black Arrow is pointing to the 50 Day Moving Average - note how this is sort of curving up a bit now - we need it to curve up a lot more and to pass over the 200 Day Moving Average to give us a ‘Golden Cross’ - that would be a significant development in favour of the Bulls. It is something to watch but the way these things work is that if we get some weakness in coming weeks, then the 50 Day MA could easily turn downwards again. In an Ideal World, the 200 Day MA would be rising or at least flat when the 50 Day MA crosses it.
The other thing to spot is my Red Line (marked with the Red Arrow) which is a Downtrend Line from right back in Summer 2015 - we are above this and it would not be too much of a problem if the Price retraced back down to this line and then turned up again - it is possible.
My Green Arrow is pointing to a Big Down Candle from Thursday 24th March 2016 and this is obviously a bearish thing. My Blue Circle is enclosing an ‘Inverted Hammer’ Candle from Friday 18th March 2016 and it looks like this feature could be dominating this Chart at the moment - Thursday’s Down Candle is effectively swinging down off this Inverted Hammer. Note the Intraday Resistance here at 6237 and then we have more Resistance up around 6250 where the 200 Day Moving Average is sitting. The next significant Support is at about 6036 as I have marked.
I wanted to show the ‘Big Picture’ for the S&P500 first off - this is the most important US Index in my view as the Dow Jones only has 30 Stocks and it is pretty silly really.
The thing I want to emphasise here is that even though the Index violated the lower Black Lower Line (marked with my Black Arrow) of the well-established Uptrend Channel from 6 Years or so, the Price got back up inside that Channel and that is where we are now. If it can stay within the Channel, then that would be nice.
My Green Arrow is pointing to the 200 Day Moving Average - it is still falling but the rate of decline has slowed and maybe it can start to level out - we need the 50 Day Moving Average (marked with my Red Arrow) to turn up and do a ‘Golden Cross’ similar to what I mentioned earlier on the FTSE100. However, there is still a big distance between the 2 Moving Averages and a lot can happen in the time needed to get a Golden Cross !!
It is worth noting that back at the end of December 2015 we had a Golden Cross but it failed in this case as the Markets went into ‘Free-Fall’ mode.
The Market is open and trading today (Monday 28th March 2016) but these ScreenShots do not include today’s Price Action - I wanted to get this Blog done and published !!
On the Chart below, my Blue Arrow is marking a ‘Hammer’ Candle which was produced on Thursday 24th March 2016. After a Down Candle the day before, this might show a Reversal and the Price could move up now. It is worth noting that the Price Reversed Intraday at $39 so this could be an area of Support for the Price.
My Blue Arrow is pointing to the 200 Day Moving Average which is still falling strongly - so this is still very much a Major Downtrend. My Black Arrow shows the 50 Day Moving Average and it is good to see this has curved upwards - ideally we need a ‘Golden Cross’ here as I have mentioned on previous Indexes.
Note the Resistance at about $42.5 - this looks a tough area to get over and just above that we have more Resistance at the 200 Day Moving Average at about $44. My big Black Circle in the top left shows a lot of Resistance in a Zone from about $46 to $54.
I wanted to get some context on Gold. The Screen below shows the Daily Candles for about 2.5 Years and I have drawn in a Downtrend Channel which was clearly a feature here for some time. My Blue Circle shows how the Price got out of this Downtrend Channel but it is possible that this is just an ‘overshoot’ and it could fall back within the Channel. On the positive side we got a Bullish ‘Golden Cross’ on the 50 and 200 Day Moving Averages but we really need to see the Price stay up above this Channel. I guess $1200 is a Key Level and we really need the Price to find Strong Support here and to move up from it and avoid plunging back into the Channel.
Note how my Black Triangle broke down in a bad way. My Green Arrow shows the 50 / 200 Day MA Golden Cross.
It is clear the Price needs to get over $1284 to really give the Bulls confidence.
My Blue Arrow is pointing to where the Red 13 Day Exponential Moving Average (EMA) is on the verge of crossing the Green 21 Day EMA in a ‘Bearish Cross’. The Black Arrows point to similar instances of this happening and in nearly all cases it turned out badly - we might escape this development, but it looks quite likely to happen.
Right, that’s it, have a great week, WD.