Ftse 12

TBS

Well-known member
385 0
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!
 
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orchard

Active member
163 2
NICE :!: post - NICE - b****y marvellous. Well at least for someone like me :cheesy:
You can read all the books you like and get perfect patterns and trend lines, or real charts of two years ago.
BUT these are real, now and very, very clear.
I have printed them off to study, my ISP cuts out after 10 mins so looking at it on screen for any length of time is difficult.
Many thanks TBS.
 

Fluke

Well-known member
456 1
Thanks a lot TBS,you must have spent some time going through these charts.You have showed me how to read these charts and I have taken a copy of all of them to refer to later.I also copied the FTSE index charts you displayed.
Information is the most valuable commodity in the world and I really appreciate that you are willing to share it with us.

Am looking forward to you next posts.

Regards Jon.
 

Helenqu

Established member
841 3
An interesting other perspective on this is to use AIQ to examine which share price movements correlate best with the FTSE movements. In the past 12 months this is the top 2O ranking:

III, LGEN, PRU, OML, AV., HSBA, BP, BARC, AL, BAY, RIO, STAN, FP, DMGT, SHEL, RBS, BOC, REL, WPP, BLT.

By my reckoning only 5 fit in both lists:

BP, HSBA, RBS, SHEL, and BARC so maybe these are the ones to really focus on if you find 12 too many to keep a handle on?
 

Fluke

Well-known member
456 1
HELENQU

Thanks a lot Helen,you have confirmed my thoughts about selecting a short list of FTSE stocks to follow.I have now decided to follow a very short list,in order to remove a lot of mental clutter.
 

kevin546

Established member
699 0
Hi TBS

Just seen your post and it makes excellent reading well done and thank you.

Do you cover intraday positions as well.

regards Kevin
 

TBS

Well-known member
385 0
Hi Kevin,

Thanks, I only cover the intraday positions of stocks in which TBSLtd have positions - usually US based stocks, and the commentry is only for internal use.

However, I'm working on a project that looks at both intraday and wider time frames, again I suspect it will be a pay-per-view service rather than something I can post up for free, although I'll still be doing these kind of analyses when the fancy takes!
 

SoldierOfOne

Junior member
39 0
My concern is that we are going to have another summer of boredom where we end up stuck in these ranges – hopefully not!


Hullo TBS
To echo others – excellent post. Many thanks. Some of these shares are in my ‘FTSE EOD universe’ and it was good to see your thoughts on support and resistance.

As a newbie, I am looking at swing trading such shares by mainly (in fact, only) using support and resistance levels (with trendlines). My frustration is that the prices are fluctuating between S and R without actually getting close and that I rarely get to make my 1p/point trade on FINs. My danger is that I’ll start to chase a trade and the risk: reward goes out of the window and end up over trading…either that or go after shorter time periods (e.g. daily as and when the day job allows).

If such a summer comes to pass, should one just have patience, trade less (= v. infrequent for me = but then how to learn and make progress?) and wait for the S or R to be tested or jump in earlier but have a clear 'plan the trade, trade the plan' with associated stop loss levels?

Cheers

Andrew
 

RogerM

Established member
752 6
Andrew - you will have read this countless times on this site - if you can't find shares at the right part of the trading range in the UK from the 350 shares that have reliable liquidity in the FTSE 350, why not do the same thing for the US - where you have about 4000 shares with the same attributes?

Get yourself TC2000 which will cost you $29.95 per month including data - run a routine that seeks for breakouts - and take your pick! If you trade using IB, you can set up your order screen with your planned entry price on a stop, the limit you are prepared to pay, and then hit the transmit button at the open and wait to see if you get a fill. If you do, set a trailing stop and a target price on a "one cancels all" basis and then you can go away and leave it. Make sure you cancel any unfilled orders that you have placed in the system for other shares where the price has not met you requirements of course! You don't want these being filled in your absence with no stop in place.

If the price spikes up past your target, then out you come with a profit - if it falls past your trailing stop, out you come automatically. Check again before the close to see what the progress has been. See if there are any shares which have not been stopped out or have not reached the target price, and decide whether you wish to close manually or whether you want to hold overnight. Adjust stops as you think necessary.

The adavantages of the US have been described many times on this site. No stamp duty, tighter spreads, lower commissions, more liquidity, and before Naz gets in, there are also the delights of Nasdaq level 2, although not needed for the methodology described above where all decisions are made before the open, when you are not under pressure! :)
 
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TBS

Well-known member
385 0
If such a summer comes to pass, should one just have patience, trade less (= v. infrequent for me = but then how to learn and make progress?) and wait for the S or R to be tested or jump in earlier but have a clear 'plan the trade, trade the plan' with associated stop loss levels?

Whatever the circumstances you should always trade with patience, the market will ofer the trades, if you go chasing them then you are more liable to just tie money up in stocks with no particular movement, a pointless exercise.

You can buy or sell a stock at any time, so long as you have the appropriate plan in place. The idea is to place your trades so that you have a greater chance of success, weighting the odds in your favour. For swing trading this means having the patience and discipline to stay out of the market until you are happy that a particular set-up is occuring and then trading that set-up according to whatever your plan is.

It is the market that offers you the opportunity to make money, it is you that offers yourself the opportunity to lose it :)
 

RogerM

Established member
752 6
A quote from Linda Bradford-Raschke, a brilliant US Trader :-

" Deciding to stand aside is taking a position"

Whenever I get impatient, I try to remember this one.
 

SoldierOfOne

Junior member
39 0
Hullo RogerM
Thanks for the reply. I have read your erudite postings before on this site (including an ‘interview’, from memory), latterly on the Options thread. You have put much food for thought on my plate – the table is groaning under so much information at the moment ! I’m trying to keep it simple by following a few UK stocks and develop a trading style that suits me. I will print your suggestion out though, as a possible route to follow.

TBS – wise words, again.
For swing trading this means having the patience and discipline to stay out of the market until you are happy that a particular set-up is occuring and then trading that set-up according to whatever your plan is

Yep, agree, of course. My frustration is that unless I actually place trades I don’t feel as if I’m learning and moving forward. Whilst this is good for my capital preservation, I guess I need to keep taking small steps (rather than giant leaps) along the road to becoming a successful trader. The hallmarks of successful traders (and people in general) are, I believe, perseverance and persistence in seeing something though and not giving up; this site is great for offering such encouragement to newbie and experienced traders alike.

Cheers

Andrew
 
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