FTSE12 Review
The index itself has bounced from the lows and broken the nearby 1 year down trend (although still well under the longer term down trend). This should of course give us all some hope that the whole complex is showing signs of recovery. The million pound question is:
Whether we are seeing yet another shelf, from which we will continue to motor downwards, or are we in the real throes of a longer term accumulation phase where buying the dips becomes the norm, rather than selling the rallies? (No coughing at the back please.)
Long term chart patterns still suggest a crack at 2400/2500 as a real possibility.
Frankly, who knows? Much discussion can be made for both the bull and bear cases – War Rally/ Feel good factor v’s Economic gloom.
Overall none of the major indices have broken their longer term down trends, however, all of them have bounced from lows and started to establish ranges (as they did last summer) which represent the physical buying and selling behind those discussions.
The top 12 companies in the FTSE100 represent 60% of the weighting of the index, so what they are up to affects the index more than most, so rather than looking at the overall picture, perhaps time to have a closer look at the drivers.
BP
At consistently over 10% of the index BP has the largest affect. Still not really that far from it’s lows, the price action has been well contained in a 390/435 range for the past 6 months, other than the odd flurry when the markets really tanked at the end of January.
390 and 435 represent the key levels for the stock and a break above 435 would represent a return to a bull trend with 495 as an immediate target.
VOD
The nightmare of VOD sub 100 seems to have subsided for the moment and with the retracement back to 100 caused when we fell over again, we now have a more sensible rate of climb that has been seen for a while. I would hesitate to call it an established bull trend as such, but any closes above127 would confirm that VOD is finally looking good to the upside with a target of 140 to begin with and 190 longer term.
GSK
Ranges within ranges, GSK has provided excellent short strangle opportunities for the options traders over the past 8 months or so. The 1200 level has acted as a pivot to the whole price action with major support at the psychologically important 1000 level and major overhead resistance at 1400. Meanwhile we have an even tighter range between 1100 and 1300. These provide the initial levels which would cause interest if they were broken, 1400 is a huge level which if broken would certainly merit the bull tag being attached to the stock again. The stock was described to me the other day as ”flat as a witch’s tit” – Gladly this is something that I cannot confirm!
HSBA
Similar pattern to most, but no break of trend yet, a nice H&S reversal just about making target c 630 and a reasonable bounce into yet another range 630/720. Here 720 provides the key to the upside, a previous right shoulder level, a break here would give an initial target of major overhead resistance at 780.
RBS
RBS has been bouncing around in a huge range for the past 8 months, great for day traders and options writers alike. With the daily range of movement and volume I would suggest that this is currently one of the favourite day traders stocks. Major support at 1250 and major resistance at 1700, the break of either should produce quite a move, certainly with 2050 highs as a target to the upside and potentially sub 1000 to the downside. The combination of 5% weighting and the range of movement perhaps make this stock more influential than BP.
AZN
Much like GSK (perhaps not unsurprisingly) AZN has a range within a range with 2100/2200 area acting as a pivot to the price action. Again a big accumulation phase between 1800 and 2600 with two smaller ranges, 2100-1800 and 2200-2400 containing much of the price action. With the large points value another day traders favourite.
A break of 2600 should certainly pave the way to a longer term target of 3400. A break of 1800 and we are looking at 1000.
SHEL
“Rangebound of The Netherlands!” 380 providing the pivot with the 1 year bear trend broken. 430 and 340 bound the extremes of the price action and the stock should be considered range bound until one or t’other is broken. Nothing that could be construed as offering any likely targets.
BARC
Again a huge range, but the bear trend has been broken and the patient is showing signs of life. The double bottom pattern offers up an immediate target of overhead resistance at 480, a break of the psychological 500 level and it is definitely off to the races again. 320 provides the base support. Immediate support at 390.
HBOS
On the up at the moment, 680 providing the pivot to the wide range and 780 the overhead resistance. I would rather be long it than short but very wary of a break of 680.
DGE
Still operating under the short term bear trend, albeit quite close to it at the moment. DGE has completed it’s target of 700 from the H&S reversal formed through late Jan, early March – actually a pretty good text book example of the pattern, including the retest of the neckline.
Where from here will depend on the overhead resistance at 710 and the trendline at 715, a break here should see a continuance of the current up trend (I hesitate to call it a bull trend) to the next target at 800. A break below 640 should see us back at the lows.
LLOY
Flirting with the 1 year down trend at the moment but having recovered from it’s lows. 475 provides the key resistance level to further serious gains. A break below 350 would make it look particularly weak again.
ULVR
For a basic commodity company ULVR manages to get some movement into it’s share price, the recent one being a great double bottom through570 with a target c 640, which it has basically made. Where we go from here depends on a break out of the top of the years price action, through 640, opening up a longer term set of chart patterns with a target of something like 780, the potential is certainly there. 600 provides immediate support followed by the 570/560 area.
Summary
All of these companies are basically stuck in ranges, off their current lows, but not enough umph yet so that we can say that they are in a bull run. This of course is mirrored in the FTSE100 itself with 4000 providing the immediate resistance and 4225 being the key level to the potential of a sustainable bull market.
If you are at all wondering where FTSE is going it is always worth a few minutes to flick through these 12 charts as they really encapsulate the whole picture. My concern is that we are going to have another summer of boredom where we end up stuck in these ranges – hopefully not!
The index itself has bounced from the lows and broken the nearby 1 year down trend (although still well under the longer term down trend). This should of course give us all some hope that the whole complex is showing signs of recovery. The million pound question is:
Whether we are seeing yet another shelf, from which we will continue to motor downwards, or are we in the real throes of a longer term accumulation phase where buying the dips becomes the norm, rather than selling the rallies? (No coughing at the back please.)
Long term chart patterns still suggest a crack at 2400/2500 as a real possibility.
Frankly, who knows? Much discussion can be made for both the bull and bear cases – War Rally/ Feel good factor v’s Economic gloom.
Overall none of the major indices have broken their longer term down trends, however, all of them have bounced from lows and started to establish ranges (as they did last summer) which represent the physical buying and selling behind those discussions.
The top 12 companies in the FTSE100 represent 60% of the weighting of the index, so what they are up to affects the index more than most, so rather than looking at the overall picture, perhaps time to have a closer look at the drivers.
BP
At consistently over 10% of the index BP has the largest affect. Still not really that far from it’s lows, the price action has been well contained in a 390/435 range for the past 6 months, other than the odd flurry when the markets really tanked at the end of January.
390 and 435 represent the key levels for the stock and a break above 435 would represent a return to a bull trend with 495 as an immediate target.
VOD
The nightmare of VOD sub 100 seems to have subsided for the moment and with the retracement back to 100 caused when we fell over again, we now have a more sensible rate of climb that has been seen for a while. I would hesitate to call it an established bull trend as such, but any closes above127 would confirm that VOD is finally looking good to the upside with a target of 140 to begin with and 190 longer term.
GSK
Ranges within ranges, GSK has provided excellent short strangle opportunities for the options traders over the past 8 months or so. The 1200 level has acted as a pivot to the whole price action with major support at the psychologically important 1000 level and major overhead resistance at 1400. Meanwhile we have an even tighter range between 1100 and 1300. These provide the initial levels which would cause interest if they were broken, 1400 is a huge level which if broken would certainly merit the bull tag being attached to the stock again. The stock was described to me the other day as ”flat as a witch’s tit” – Gladly this is something that I cannot confirm!
HSBA
Similar pattern to most, but no break of trend yet, a nice H&S reversal just about making target c 630 and a reasonable bounce into yet another range 630/720. Here 720 provides the key to the upside, a previous right shoulder level, a break here would give an initial target of major overhead resistance at 780.
RBS
RBS has been bouncing around in a huge range for the past 8 months, great for day traders and options writers alike. With the daily range of movement and volume I would suggest that this is currently one of the favourite day traders stocks. Major support at 1250 and major resistance at 1700, the break of either should produce quite a move, certainly with 2050 highs as a target to the upside and potentially sub 1000 to the downside. The combination of 5% weighting and the range of movement perhaps make this stock more influential than BP.
AZN
Much like GSK (perhaps not unsurprisingly) AZN has a range within a range with 2100/2200 area acting as a pivot to the price action. Again a big accumulation phase between 1800 and 2600 with two smaller ranges, 2100-1800 and 2200-2400 containing much of the price action. With the large points value another day traders favourite.
A break of 2600 should certainly pave the way to a longer term target of 3400. A break of 1800 and we are looking at 1000.
SHEL
“Rangebound of The Netherlands!” 380 providing the pivot with the 1 year bear trend broken. 430 and 340 bound the extremes of the price action and the stock should be considered range bound until one or t’other is broken. Nothing that could be construed as offering any likely targets.
BARC
Again a huge range, but the bear trend has been broken and the patient is showing signs of life. The double bottom pattern offers up an immediate target of overhead resistance at 480, a break of the psychological 500 level and it is definitely off to the races again. 320 provides the base support. Immediate support at 390.
HBOS
On the up at the moment, 680 providing the pivot to the wide range and 780 the overhead resistance. I would rather be long it than short but very wary of a break of 680.
DGE
Still operating under the short term bear trend, albeit quite close to it at the moment. DGE has completed it’s target of 700 from the H&S reversal formed through late Jan, early March – actually a pretty good text book example of the pattern, including the retest of the neckline.
Where from here will depend on the overhead resistance at 710 and the trendline at 715, a break here should see a continuance of the current up trend (I hesitate to call it a bull trend) to the next target at 800. A break below 640 should see us back at the lows.
LLOY
Flirting with the 1 year down trend at the moment but having recovered from it’s lows. 475 provides the key resistance level to further serious gains. A break below 350 would make it look particularly weak again.
ULVR
For a basic commodity company ULVR manages to get some movement into it’s share price, the recent one being a great double bottom through570 with a target c 640, which it has basically made. Where we go from here depends on a break out of the top of the years price action, through 640, opening up a longer term set of chart patterns with a target of something like 780, the potential is certainly there. 600 provides immediate support followed by the 570/560 area.
Summary
All of these companies are basically stuck in ranges, off their current lows, but not enough umph yet so that we can say that they are in a bull run. This of course is mirrored in the FTSE100 itself with 4000 providing the immediate resistance and 4225 being the key level to the potential of a sustainable bull market.
If you are at all wondering where FTSE is going it is always worth a few minutes to flick through these 12 charts as they really encapsulate the whole picture. My concern is that we are going to have another summer of boredom where we end up stuck in these ranges – hopefully not!
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