Indices Review 15 April 2003
Ah, nothing like beating up a few rag-heads to give the markets a boost, now that things seem to be ‘calming down’ (famous last words) perhaps the true economics of the situation will start to bite.
Before we look at the charts my favourite quote from Blackadder:
“George: You know, that's the thing I don't really understand about you, Cap. You're a professional soldier, and yet, sometimes you sound as though you bally well haven't enjoyed soldiering at all.
Edmund: Well, you see, George, I did like it, back in the old days when the prerequisite of a British campaign was that the enemy should under no circumstances carry guns -- even spears made us think twice. The kind of people we liked to fight were two feet tall and armed with dry grass.
George: Now, come off it, sir -- what about Mboto Gorge, for heaven's sake?
Edmund: Yes, that was a bit of a nasty one -- ten thousand Dwatushi warriors armed to the teeth with kiwi fruit and guava halves. After the battle, instead of taking prisoners, we simply made a huge fruit salad. No, when I joined up, I never imagined anything as awful as this war. I'd had fifteen years of military experience, perfecting the art of ordering a pink gin and saying "Do you do it doggy-doggy?" in Swahili, and then suddenly four-and-a-half million heavily armed Germans hove into view. That was a shock, I can tell you.”
Dow Jones Industrial
1 year Chart
Best described as drifting along between 7600 and 9100 – a pretty wide range, offering plenty of opportunity for those that choose to day trade the index. (9100 is the critical level at which Dow could be considered back into a bull market
4 year Chart
Currently flirting with the long-term down trend, again shows the importance of the 9100 level, a completion of the potential triple bottom here would give a target c 10700. 7500 remains key base support, whether we will see it again will depend on how well the reporting season goes and whether the unemployment queues start to shorten.
SP500
1 year Chart
Nearby downtrend is broken, pretty solid support c800 with resistance at 900 then 960. 960 remains the key to the upside, the current levels 860/880 continue to provide the area of indecision as shown by the 860/880 movements in the past week or so.
4 year Chart
Overall we are still lurking under the long term bear trend, currently c925. The range 960/800 is very apparent, an upside break of 960 gives us a target c1140/50.
FTSE100
1 year Chart
Well out of the nearby bear trend and stuck in the wide range 3600 – 4225. 400 provides the nearby resistance, followed by major resistance at 4225 – this is the key level to be broken before FTSE should be considered back into any form of bull market.
4 year Chart
A slightly different picture, the price action still well below the long term bear trend, currently c4450. We have seen 800 point rallies before and still maintaining the overall negative picture, whether the current rally ‘sticks’ or fails depends on the 4225/3600 levels.
Dax
1 year Chart
Probably the clearest short term reversal of all of the markets, the current break of 2800 should give a target around the top of the range at 3400, the main sticking point will be the psychological resistance at 3000. One to watch for the clarity of the movement.
4 year Chart
Longer term, Dax has taken such a beating that it could almost double in value from its lows and still remain under a long term bear trend. The 3500 and 2500 levels remain key to the market with the trend still sitting c4100.
Summary
In the shorter term the markets could best be described as range-bound. We seem to have got away from the perma-drops that were making the news and entered a period of stability (albeit with plenty of trading opportunities, hopefully). If any of the markets can break some decent overhead resistance it will be for the first time in something like 4 years, that takes a lot of ‘faith’ from the investing community.
From a personal perspective I’m not sure that we have seen ‘the bottom’ but as a TA am prepared to roll with the market. Having had several discussions on this topic recently, the concern is that the markets may just drift sideways for the summer now that the ‘War’ is won and assuming that nothing too nasty happens as a result.
In the words of Mr Clapton:
I'm drifting and drifting, just like a ship out on the sea.
I'm drifting and drifting, just like a ship out on the sea.
Well I ain't got nobody in this world to care for me.
Ah, nothing like beating up a few rag-heads to give the markets a boost, now that things seem to be ‘calming down’ (famous last words) perhaps the true economics of the situation will start to bite.
Before we look at the charts my favourite quote from Blackadder:
“George: You know, that's the thing I don't really understand about you, Cap. You're a professional soldier, and yet, sometimes you sound as though you bally well haven't enjoyed soldiering at all.
Edmund: Well, you see, George, I did like it, back in the old days when the prerequisite of a British campaign was that the enemy should under no circumstances carry guns -- even spears made us think twice. The kind of people we liked to fight were two feet tall and armed with dry grass.
George: Now, come off it, sir -- what about Mboto Gorge, for heaven's sake?
Edmund: Yes, that was a bit of a nasty one -- ten thousand Dwatushi warriors armed to the teeth with kiwi fruit and guava halves. After the battle, instead of taking prisoners, we simply made a huge fruit salad. No, when I joined up, I never imagined anything as awful as this war. I'd had fifteen years of military experience, perfecting the art of ordering a pink gin and saying "Do you do it doggy-doggy?" in Swahili, and then suddenly four-and-a-half million heavily armed Germans hove into view. That was a shock, I can tell you.”
Dow Jones Industrial
1 year Chart
Best described as drifting along between 7600 and 9100 – a pretty wide range, offering plenty of opportunity for those that choose to day trade the index. (9100 is the critical level at which Dow could be considered back into a bull market
4 year Chart
Currently flirting with the long-term down trend, again shows the importance of the 9100 level, a completion of the potential triple bottom here would give a target c 10700. 7500 remains key base support, whether we will see it again will depend on how well the reporting season goes and whether the unemployment queues start to shorten.
SP500
1 year Chart
Nearby downtrend is broken, pretty solid support c800 with resistance at 900 then 960. 960 remains the key to the upside, the current levels 860/880 continue to provide the area of indecision as shown by the 860/880 movements in the past week or so.
4 year Chart
Overall we are still lurking under the long term bear trend, currently c925. The range 960/800 is very apparent, an upside break of 960 gives us a target c1140/50.
FTSE100
1 year Chart
Well out of the nearby bear trend and stuck in the wide range 3600 – 4225. 400 provides the nearby resistance, followed by major resistance at 4225 – this is the key level to be broken before FTSE should be considered back into any form of bull market.
4 year Chart
A slightly different picture, the price action still well below the long term bear trend, currently c4450. We have seen 800 point rallies before and still maintaining the overall negative picture, whether the current rally ‘sticks’ or fails depends on the 4225/3600 levels.
Dax
1 year Chart
Probably the clearest short term reversal of all of the markets, the current break of 2800 should give a target around the top of the range at 3400, the main sticking point will be the psychological resistance at 3000. One to watch for the clarity of the movement.
4 year Chart
Longer term, Dax has taken such a beating that it could almost double in value from its lows and still remain under a long term bear trend. The 3500 and 2500 levels remain key to the market with the trend still sitting c4100.
Summary
In the shorter term the markets could best be described as range-bound. We seem to have got away from the perma-drops that were making the news and entered a period of stability (albeit with plenty of trading opportunities, hopefully). If any of the markets can break some decent overhead resistance it will be for the first time in something like 4 years, that takes a lot of ‘faith’ from the investing community.
From a personal perspective I’m not sure that we have seen ‘the bottom’ but as a TA am prepared to roll with the market. Having had several discussions on this topic recently, the concern is that the markets may just drift sideways for the summer now that the ‘War’ is won and assuming that nothing too nasty happens as a result.
In the words of Mr Clapton:
I'm drifting and drifting, just like a ship out on the sea.
I'm drifting and drifting, just like a ship out on the sea.
Well I ain't got nobody in this world to care for me.
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