Market steady ahead of US housing figures

The JSE stocks rallied hard yesterday and was up by about 1.5% for the day. Keep in mind that the UK market was closed yesterday due to a bank holiday, and our total volumes traded on the JSE was a lot lower than normal.

The US markets opened up relatively unchanged and turned weaker to give back all the gains it made on Friday.

At 15:00 the S&P House price index releases its findings and an expected rise of 3.8% is expected. A disapointment from this figure could send the markets down up until 15:45 when the Chicago PMI figures are released, and then at 16:00 the consumer confidence figures are released.

Expect volatility to pick up just before these figures are released.

Keep positions small and wait for the trend to establish before executing your strategy. Being on the wrong side in this market can prove immensely expensive.

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Possible reversal on the markets

On Friday our market paired its losses in the last hour of trading. The American markets also turned around after Fed Chairman Ben Bernanke assured investors that the Fed will do all in it's power to stabilise the economy. It then went on to rally up nicely and close above 1.5% for the day.

The UK has a bank holdiay today, so the FTSE is closed today. Volatility and low volumes can be expected.

It would be prudent to take profit on short positions. We've seen only a few stocks that gave us buy signals this morning, but if the markets continue to rise, more stocks would start giving us a heads up.

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Nearing the 26 000 support level

As forecasted by our technical analysis yesterday the market came down 599 points (2.21%).

We are nearing the support level at 26 000 and we expect a bounce from there. But the newsflow about the global macro economic conditions doesn't look too good.

Unemployment claims from the US is out later this afternoon and tomorrow it's their GDP figures. All indications point to the news being negative, and we could just as well go below the 26 000 level.

If this crucial support level turns into a resistance level, we could see some panic selling around the world.

But the world is not coming to an end as we know it. (Only if you're long stocks)

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Markets still weak

The market is continuing its downward trend today and we're down about 0.5% on the All Share Index.

Yesterday the numbers out of the US housing market dissapointed again with their existing home sales coming in much lower than expected.

BHP Billiton released results this morning. They doubled their net income, but dissapointed on top line earnings. Subsequently the market reaction was mixed, and it's trading unchanged from yesterdays' close at 20534c.

New home sales are released out of the US today, and if yesterdays' existing home sales figure is anything to go by, expect mediocre numbers.

This could influence the market to the downside, and we think that the market will continue its downward trend for the rest of the week, encountering support at 26 000.

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The dead cat bounced 372 points

Our market has opened down about 1% this morning. Yesterdays' relief rally seems to have sucked in the bulls and will squeeze them today.

Our GDP figures are released today, and the consensus is that a slowdown is expected.

News out of the USA today is their existing home sales numbers to be released at 16:00. A weaker number is expected and we could see the downtrend on the North American markets to continue.

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Market trading below the 200-day Moving average

After a negative week last week around the world, the JSE is trading below the 200-day moving average. This is a bearish signal for long term investors. Also taken into account the Hindenburgh Omen that occured on the 12th of August, sitting in cash or buying into defensive stocks would be a safe bet at the moment.

The head and shoulders formation is now fully formed and the right arm is forming, thus we expect the market to go down to 26 000 before encountering some support. The 26000 level is crucial since a break and close below 26 000 would turn this support level into resistance.

The Nedbank HSBC deal has gone public and Old Mutual's share price has soared 5% on the opening of the market.

Resource shares has received some support out of Australia. The proposed mining tax has been put on hold for now after the recent elections that have taken place.

We expect the market to trade down further today.

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How high can a dead cat bounce?

Dead cat bounce is a Wall Street term that refers to a small, brief recovery in the price of a declining stock [Wikipedia]

Don't get sucked in with the rest of the bulls. As you can see from the JSE All Share graph above, there is no real support except at 26 000.

We expect a bit of a bounce in the market today, since there is no significant news coming out today.

If you are long, good luck, since that is the only thing that will be in your favour. At the moment being long in this market is like catching a falling piano...

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Markets indecisive

The markets are indecisive this morning.

First we opened up by a 170 points, to fall by 300 points when the equity market opened at 09:00, and to reverse those losses to trade up again by another 220 points to where we are now.

The markets are eyeing unemployment claims released at 14:30 and the Philly Fed Manufacturing Index at 16:00,

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Technical view: Market on its way down to 26 000

This is the JSE Allshare Index. This morning it was starting to form the second shoulder, and by the looks of it, it's testing the neckline at the moment.

As we can see from the graph, there is no resistance between where we are now and 26 000.

We will be monitoring our short trades that we've put on, adding when it's already in a tidy profit.

Safe trading.

Market trading down this morning

The ALSI opened fairly unchanged this morning but has since dropped over 1% and is trading at 24350 at the moment.

The above chart is the JSE Allshare Index that we posted on Monday for a potential head and shoulder pattern forming. As of this morning it looks that the forming of the right shoulder is almost complete.

Short term traders can look to short stocks or indexes here, except for gold related securities. If it breaks down, we expect it to reach the 26 000 level within the next 5 days.

Start small trades and add more weight if the trade is in your favour.

There is no significant news expected from abroad, but in SA we're expecting retail sales figures out later today.

Safe trading.

Market trading slightly higher this morning

The ALSI opened up 120 points this morning and is currently trading at 24580. There is some resistance at 24600. If it breaks out of 24600, we can see it trading significantly higher.

News that could influence the market today is the British CPI out at 10:00 and PPI and Building permits out of the US at 14:30. A low CPI figure could awaken deflationary fears.

Overall volume remains subdued and indicates uncertainty in the market.

Safe trading.

Technical perspective: Market looking to extend losses

This is the daily graph of the JSE Allshare Index.

There is a developing head and shoulder formation on the daily graph with the two cirlcles indicating the shoulders. The second shoulder is not yet fully formed, but be cautious.

A head and shoulder formation is not a 100% indication that the market will come down after the second shoulder have formed, but the probability is around 80%.

Also another technical analysis pattern, the Hindenburg Omen, is looking to develop.

The Hindenburg Omen is a technical analysis pattern that is said to portend a stock market crash. It is named after the Hindenburg disaster of May 6, 1937, during which the German zeppelin Hindenburg was destroyed. [Source: Wikipedia]

To read more about the Hindenburg Omen, click here http://en.wikipedia.org/wiki/Hindenburg_Omen

Volatility has continued its uptrend since going up from the 6th August 2010. Gold is also trading higher this morning at $1219 per ounce.

The Asian markets are trading higher this morning and the Dow Futures are positive by 0.13%. We expect the momentum of the relief rally to slow today or tomorrow before turning negative again, confirming the head and shoulders pattern.

Thus, we think there is currently more downside risk than upside risk.

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We opened a short position at 24320 on the ALSI

We opened a short position on the ALSI at 24320.

We expect the market to trend down and will keep our stop loss levels tight. Especially around 14:30 when the news from the USA is released.

If the news is bad, we'll add more weight to an already profitable trade, but never add to a losing trade.

Ride your winners and cut your losing positions so that you have enough bullets when you get a trading signal.

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Markets taking a deep breath

The ALSI opened up around 200 points this morning, but it's consolidating at the moment around the 24340 level.

Yesterday and today looks like a bit of a relief rally, and we are expecting inflation and retail sales figures from the US later this afternoon, which could influence the market.

Since volatility is still on the uptrend, we are cautious regarding opening new positions. For now we've taken profit on our short positions and we are either in cash or hedged.

GDP figures from Europe was in line with expectations with Germany leading growth at 2.2% for the second quarter, but Spain only expanding by 0.2%.

The new topic on the newswires is that America would probably lose the AAA credit rating in the next 3-5 years, but that's merely opinion and not a imminent risk.

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Markets continue going South

The market is continuing its downward direction and is following the markets from the rest of the world.

The market will probably test the 26000 level on the ALSH again, which is a 1500 points (-5.5%) from here.

We expect a relief rally in the next day or two, before the market continues its current trend. Volatility has spiked 13% since yesterday as well.

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The trend has broken

The ALSI opened down 140 points this morning from yesterdays' close. It has regained some of these losses, but the general trend is still to the downside.

The graph above is the daily graph of the JSE All Share index. Clearly one can see that the uptrend has ceased.

The Dow Futures are down 0.77% at the moment and is look to continue its downward movement after Fed Chairman, Ben Bernanke, gave their view on the economy last night.

Asian markets are also down, with the Nikkei 225 -2.47%.

The pullback we wrote about last week has started.

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Market trading down

We've opened our 2nd short trade on the ALSI with our stop at 24980.

At the moment the market is not coming down aggressively. It's rather coming down in a sneaky fashion, slowly but surely, building on negative momentum.

The strategy to follow here is to go short, but with a very small trade, wait until it's profitable, and add some more to the short. By the looks of things, we're not going to wait very long.


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Markets are getting nervous

The market is not looking well this morning. The ALSI is currently down 100 points or 0.4%.

We've also seen a lot of short/sell signals on shares in the TOP40. The only buy signal we've seen this morning so far has been in gold related shares.

The market has been trading down and has broken the trend on Friday as can be seen from the chart below.

The prudent thing to do is to take profit on your positions, and probably start putting short trades on.Safe trading

ALSI volatile, but trending upwards

The ALSI trade this morning has been choppy, with up and down swings, but the general trend remains up. For the past week we've been trading sideways in a 200 point range between 25400 and 25600, with support and resistance at both these levels.

A breakout through either of these levels could give some market direction.

The US unemployment rate figures are released at 14:30 this afternoon, and we expect the market to trade sideways until then.

Old Mutual posted good results this morning and is trading up 3% at 1469c.

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Jobless claims dissapoint

Jobless claims out of the US was up by 19 000 claims, at 479 000 instead of an expected drop of a 1000 claims less.

The market has been trading down since the figures was released by about 70 points.

Market in choppy territory

As you can see from the graph, trading has been quite choppy today. Uncertainty is affecting the market, and we'll have more clarity at 14:30 when the Unemployment claims from the US is released.

The expected number of claims is 456 000, which is lower than the previous periods' 457 000 claims. Any large deviation will dictate the market direction.

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ASLI trading lower again

We closed our ALSI trade yesterday with a tidy profit of 170 points per contract. 1 point equals R10.

The ALSI opened up 100 points from yesterdays' close, but have turned around and are only up 10 points at the opening of the equity market.

The market is looking a bit tired and volatility remains low. So it is still trending downwards slowly. If volatility picks up, bigger movements is expected.

Unemployment claims from the US is out later this afternoon, and could have a pivotal effect on market direction.

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We moved our stop loss down a 100 points below entry

We moved our stop loss down a 100 points below our entry to lock in profit according to the free trade principle. If the trade continues to go in our favour, we will move down the stop loss to ensure that we don't give back all the profits, if the market decide to move against us.

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Market trading down this morning

The market opened slighty down this morning and is currently trading -115 points (-0.45%).

After the run we had last month, we're expecting a bit of a pullback, and keeping our eye on volatility. If the markets trend lower with volatility remaining stable, we expect a mild pullback.

Gold have also started rising since Friday, and as we can ascertain from the chart below, it has broken the trend to the downside. Possible reasons for the rise of gold could be the depreciation of the USD and cautiousness on the side of investors due to the safe haven status of gold.

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Commodity prices for the past week

We opened a short trade on the ALSI

We opened up a short on the ALSI at 25706, and another short on 25690.

Our stop loss level is at 25900.



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Good news and earnings pushes market upwards

Yesterday's rally can be attributed to earnings reported by HSBC, which reported that profits have doubled, as well as better than expected results from the ISM manufacturing PMI from the US.

Currently the ALSI is up 49 points from yesterdays' close.

Pending home sales released at 16:00 today out of the US will be something to keep an eye on.

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Market continuing its rally

The ALSI opened up by 1% this morning, influenced by Asian markets that shrugged off the negative US GDP news from Friday.

As long as equities rally, we will continue to see Rand strength.

Driving the markets today is earnings from HSBC and BNP Paribas from European banks.

The market was up just over 9% last month and is continuing it's rally.

Currently the uptrend is still intact, but the market is getting overbought. Be cautious for a bit of a pullback.

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