The Nimble Trader – Weekly Markets Report for DIY Investor
TNT WEEKLY REPORT for DIY INVESTOR
Friday the 11th October 2019
FROM TODAY’S COMMENTARY: ‘after last week’s big bump down, the last five days have been more normal’
I FIND IT HELPS ME TO BREAK THE UK MARKET DOWN INTO THREE TIME FRAMES (SHORT, MEDIUM AND LONG) AND TO THEN ESTABLISH HOW BULLISH/BEARISH I AM IN EACH TIME FRAME AND ALSO TO PROVIDE A COMBINED READING
0 1 2 3 (4) 5 6 7 8 9
I’M 66% BULLISH IN THE ONE MONTH TIME FRAME, 66% BEARISH IN THE THREE MONTH AND 66% BEARISH IN THE ONE YEAR. THE COMBINED READING IS A BEARISH/NEUTRAL 4.
This market review is provided on the strict understanding that it is not personal financial advice to you in any way shape or form. It is my personal view of the market nothing more nothing less. Please don’t base any of your trading or investing decisions on what I do or don’t think, as I may well be wrong. Always have your own view and make your own decisions and if in any doubt contact a suitably qualified financial advisor.
The FTSE All-Share Index (which I think is the best guide to the UK market) is up both today and this week. After last week’s big bump down, the last five days have been more normal. Let’s have a look at the charts and the stats.
The ten day moving average is light green, the twenty day moving average is yellow, the red lines are resistance, the green ones support. On the three month chart he red line is a thirty day moving average and the purple a fifty day, on the one year chart the blue line is a one hundred day, the green a two hundred day.
ONE MONTH TIMEFRAME: OUTLOOK 66% BULLISH
The weekly stats are the index is up 59.01 points to 3992.2 a rise of 1.50%. In this weekly timeframe, last week’s ‘pony tail’ followed by this strong up week is BULLISH to my eyes.
The stats are: today the index is up 53.83 points to 3992.2 a rise of 1.37%. The BULLISH action that my charts picked up last Friday, that I was wary of, followed through this week and the index is now the ‘right’ side of the moving averages. Albeit that they are still inverted with the ten below the twenty.
One of the things I think with charts is that it’s vital to look at them from different angles and in different time frames. From this angle, this is what we looked at the week before last, when it looked as though 4100 was in easy reach.
Looking today from the same perspective, the action once again looks BULLISH but from a much lower position.
We were 7 days into a sideways grind along a consolidation channel between 3865 to the downside and 3960 to the upside, then today broke emphatically out to the up-side, but I would say that the move isn’t yet decisive. What goes up with the rocket can come down with the stick.
I would like to see a day that trades completely above 3960 without touching the line at all for me to take the view the breakout is decisive.
If/when that happens, we will once again be on the second step of the recent stairway. If this happens the levels I’ll be watching are 3960 to the downside and 4010 to the upside.
THREE MONTH TIMEFRAME: 66% BEARISH
The index is now flirting with the moving averages, but in this timeframe there is a lot of resistance to overcome.
ONE YEAR TIME FRAME: 66% BEARISH
Once again in this timeframe the index is right up on the averages, here it wouldn’t take much of an increase to turn 100% BULLISH.
Generally speaking, the world tends to trail around behind the US. My view is that the S&P 500 is the best way to gauge the US market. For the S&P 500 I’m 66% BEARISH in the one month time frame, 66% BEARISH in the three month and 100% BULLISH in the one year. The combined reading is a NEUTRAL 5. (Worth saying these figures are based on Thursday’s close, today at the time of writing the US market is strongly up. If it holds where it now is, we will be strongly back in BULLISH territory)
I was saying last week, how the US market which had been on the cusp of breaking out to all time highs a couple of weeks previously was now looking weak. What a difference a few days makes. Boyed up by the optimism over the latest round of US/China trade war negotiations, the market is once again looking very capable of making the breakout to the blue sky, provided that is, that the optimism is justified.
If the talks suffer a bad tempered breakdown, my guess is the US market will reverse at high speed, taking much of the world with it. But looking at it this evening, it looks very positive.
This is where the money was getting made and lost in the world this last week.
It’s worth saying that these are fund sectors and that the money flows both in and out, as well as the performance of the underlying, determine the results.
Finally for this week:
Last week the figures from the index’s were beginning to show BULLISH action, but as this wasn’t yet reflected in the readings from the moving averages, I was wary and said that in my view the longer term risk was to the downside.
In the last few days my charts are saying that that risk is easing back as investor sentiment over the US/China trade negotiations and the Brexit negotiations improves. The problem is, are the charts right?
Hum, obviously it’s in everybody’s interest for the US/China negotiations to end in peace and for Brexit to be good for both the EU and the UK, but of course that doesn’t mean that’s going to be the outcome does it?
One or more of the parties involved could easily have a hissing fit and blow either one or both sets of negotiations up and the first we’ll know about it is after the event.
So, whilst my charts have become much more BULLISH in the last 72 hours, I still remain wary of the downside.
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