That was a pretty bullish Week last week for the Major Indexes with the US in particular looking to take out the All Time Highs. Oil seems to have gone a bit soggy but Gold was again strong - so as usual I want to check out the Charts and see how things are shaping up.
But before doing the Charts, I just want to check the UK Stockmarket Almanac 2016 and see what the coming Week normally does. Regular Readers will have seen that July tends to be an ok month (4th strongest Month), and this Week (w/c 11th July 2016) is usually Up for 47% of Years with a Return of MINUS 0.1% - so the History suggests sogginess for the FTSE100 (note, ‘Wheelie’s Bookshop’ has a copy of the Almanac but you are really too late to bother with it this year. No doubt I will flag up once the 2017 Version is available.)
I wanted to start with the US today as some pretty stunning things have been happening over there with regard to the Charts - although my own view is coming to the conclusion that the Fundamentals seem to support such Bullishness less and less - although that is the story for another day.
For context, I just wanted to start with a longer view to set the scene. This Chart of the Daily S&P500 goes back about 5 years - in order to keep things visible, I have only chosen this time period, but the Clear Uptrend Channel actually goes back to 2009. What I want to show here is the Blue Horizontal Line (marked with the Blue Arrow) that actually appeared on a recent Blog and denotes the All Time High at 2135. My Tiny Green Arrow points to where we are now - which is at 2130 pretty much - so very close to the ATH.
On the Chart below I have zoomed in to just 2016 really - my Green Arrow points to a Big Up Candle that was created on Friday and clearly this looks pretty Bullish. Note how it broke over the 2120 Resistance Level which adds to the Bullishness. Obviously the big test now is if it can get over the 2135 ATH level - if it does then that is incredibly Bullish and would clearly be a strong hint at more gains to come.
On the Chart below I have zoomed in even more to show the Support Levels. Attacking the ATH is clearly an almighty event and I would not be surprised if we see the S&P500 ease back a bit before finding Support and turning up to take a run-up at the ATH - this really is quite amazing in my view.
In the Bottom Window on the Screen below, we have the Relative Strength Index (RSI) for the Daily S&P500. My Black Arrow is pointing to a current reading of about RSI 58 which is not all that Overbought at all and it could easily go higher - of course this would smash it through the 2135 ATH. Note there is some Resistance Horizontally from RSI readings around RSI 64 ish.
The Screen below has the Bollinger Bands around the Daily S&P500 going back about 9 months ish. My Blue Arrow points to where the Price is now very much up near the Upper Bollinger Band and this suggests that the upside might be limited in the Short Term - however, when a Price really gets in the Bullish Mood it can ‘hug’ the Upper Bollinger Band and keep going up - we shall see.
Again we’ll start with the Longer Term Picture - always the way to go. The Chart below has the Daily Candles for the FTSE100 going back to the 2009 Lows and shows the Uptrend Channel which was nicely in force until we broke below the Bottom Line back in mid 2015. Since dropping out of the Channel, we have had a pretty torrid time really with an awful start to 2016 followed by a steady recovery. However, we are starting to get to an interesting point where the Price will test the Bottom Uptrend Line from underneath - I have marked this with my Big Red Arrow - my Blue Arrow points to where we are now at about 6600.
6900 is the Resistance Level that the Bottom Line of the Long Term Uptrend Channel forms. It is critical that the Price can get up over this 6900 Level - the worst case for Bulls would be if it goes up to this line and then Rebounds down off it and keeps going lower - that would suggest that a New Range is being formed between the Lows at 6000 or just below and the Resistance at 6900.
The Chart below zooms in to about the last Year and I have tentatively drawn in a possible Uptrend Channel marked with my 2 Parallel Blue Lines. I think this might be a bit early to draw such a Channel as there are not really all that many ‘touch points’ at the bottom but it does look quite sweet. If I am right, then where I have put my Blue Arrow might be a difficult Resistance Level for the Price in the Short Term (around 6700) and we might see the Price fall back a bit before being able to continue Upwards.
My Green Arrow is pointing to a pretty good Up Candle from Friday which hints at more Bullishness although there is clearly Resistance at 6600. Note my Red Box with ‘6487’ in it - this was the Level of the Horizontal Range Breakout and might be tested from above as a Support Level - it might actually just test 6500.
The bottom window in the Screen below has the ‘Overbought/Oversold’ Indicator for the FTSE100 Daily. My Blue Arrow points to where it is now and it is clearly very high - so any Short Term upside might be limited.
The bottom window in the Chart below has the RSI for the FTSE100 Daily. We are currently reading about RSI 61 which I have pointed at with my Black Arrow. As you should be able to see from the Horizontal Green Line at about RSI 64, there is a bit of Resistance to the RSI moving higher. That doesn’t mean it can’t go higher, but in terms of probabilities it is verging towards unlikely - but as with any Indicator, these things need to be weighed up and considered with the other Indicators and Signals etc. that I have shown on the Charts. To back this up, I have felt for a few days that many of the Big FTSE100 Megacap Constituents (think RDSB, GSK, AZN, BP., LLOY, HSBA, NG. etc.) have been pretty heavily Overbought with RSI readings well over 70.
On the Screen below in the top window I have the Bollinger Bands for the FTSE100 Daily. Note in my Yellow Circle how the Price moved up and touched the Upper Bollinger Band but then dropped down and moved away from the Band - it is possible that it can move up from here but it is more evidence that hints to a pullback being needed in the Short Term.
This is interesting - my Chart below has the Weekly Candles for the FTSE100. I didn’t bother showing you the Weekly for the S&P500 because it looks pretty bullish and this is consistent with all the other Signals/Charts on the S&P500 - however, with the FTSE100 we have signs of trouble ahead.
My Black Arrow points to a sort of Hammer Candle which was created last week - in the context of a big run up in the Weeks before, this is a Bearish Reversal Signal - of course it might not play out, but the probabilities suggest that it will.
I am sure for many Readers (and certainly for myself) the FTSE250 is closer to our Portfolios than the FTSE100 - so I fancy a shuftie at how that Mid-Cap Index is behaving.
As usual, let’s kick off with the Longer Term picture. Below we have the FTSE250 Daily Chart going back to the 2009 Lows. There is clearly a very nice Uptrend Channel marked with my Black Parallel Lines and the Price is still pretty much within these, despite a brief foray out of the Channel to the Downside when the Brexit Vote Result was announced. Note the Red Line I have drawn in which is clearly Resistance and my Blue Arrow points to where the Price is now. It is extremely important that the Red Resistance Line is taken out soon - if it holds sway, then it is very possible that the Price can fall into a Downtrend Channel that could take us out of the Major Uptrend since 2009.
On the Chart below, I have zoomed right in to about most of 2016. My Green Arrow points to a nice Big Up Candle from Friday 8th July which looks pretty damn Bullish - however, note the 16527 Resistance Level just above which needs to be cracked. Once that is achieved, the next Resistance will come from the 200 Day Moving Average Line in particular - I have marked this with my Blue Arrow (it is at about 16700).
Note also that the Darker Blue Wiggly Line which is the 50 Day Moving Average, did a ‘Death Cross’ a few days back when it crossed down below the 200 Day Moving Average (the Less Wiggly Lighter Blue Line that I pointed at with the Blue Arrow). As the name suggests, we don’t really want to be seeing these sort of crossovers.
My Yellow Circle highlights a Hammer Candle which was bashed out on Wednesday 6th July 2016 - I am pointing this out because I think it is truly a thing of beauty in how the Price was moving down on the Monday and Tuesday with 2 Big Down Red Candles and then we had the Hammer on Wednesday which marked the ‘Reversal’ that then sent the Price Up on Thursday and Friday. Anyone who thinks Candlesticks have no value might want to consider this kind of thing……….
In the bottom window on the ScreenShot below from the marvellous ShareScope software that I use, we have the MACD (Moving Average Convergence Divergence) for the FTSE250 Daily. My Pink Circle is pointing out how the Red MACD ‘Hump’ is starting to move towards going Positive and turning Green - my Blue Arrow shows this on the ‘Signal Lines’. If we can get such a crossover, then this would be Short Term Bullish.
Brent Crude Oil
My Chart below has the Daily Candles for Brent Oil going back for most of 2016. The thing to note here is that the Price has clearly fallen out of my Blue Parallel Lines Uptrend Channel which was nicely dominating things for most of this year. My Yellow Circle highlights how the Price Action has now been taking place outside of this Uptrend Channel - this is obviously not so good for Bulls.
I have drawn in a Green Line (marked with the Green Arrow) which could be a new Resistance Line and this might prove problematic. The Price is now just above $46 and this is now Support.
In the Chart below we have the Bollinger Bands for the Daily Brent Oil Candles going back just a few months. My Black Arrow is pointing to where we are now sat on the Bottom Bollie Band - it is likely that it acts as Support and the Price moves up now - although clearly things have taken on a Bearish lustre and there is Resistance up above as I mentioned earlier.
The screen below has the Weekly Candles for Brent Oil - my Black Arrow is pointing to an ugly looking Big Down Red Candle from last week and I have left the Blue Circle which I showed on a recent Blog which encompasses an ‘Inverted Hammer’ which suggested these falls would come - yet another example of CandlePower !!
The Chart below has the Daily Candles for Gold going back for most of 2016. My Blue Arrow is pointing to a sort of Hammer Candle which was bashed out on Friday which hints that we might see more strength in the price - but as I will show on the Weekly Candles further down, there is some Bearishness about. We need to breakout over $1375 to be confident it wants to go higher in the Short Term - this might be a big ask.
On the screen below we have the Bollinger Bands - my Turquoise (or whatever colour it is) Circle shows how the Price has fallen away from the Upper Bollinger Band - this hints at Bearishness.
The Chart below has the Weekly Candles for Gold. This don’t look so great - my Lime Green Circle is highlighting an ‘Inverted Hammer’ we had generated last week which in the context of the recent run up, suggests we will see falls now.
OK, that has upset the Goldbugs enough - I’ll knock it on the bonce there, have a great week,
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