Zignals blog

Half-term report: UK stocks for 2009

noreply@blogger.com (Declan (@zignals.com)) — Mon, 13 Jul 2009 11:09:00 +0000

In January of this year I posted a list of 5 UK stocks for 2009. How have they fared so far this year?

First was HSBC Holdings (HSBA). The bullish wedge I had outlined at the start of the year was decisively broken to the downside - which left the stock in considerable trouble. The stock halved in value, reaching a low of 253.74p. From its low in March the stock recovered back to 583.50p and curently trades at 496p - still well off the then broker targets of 745.85-765.61p. The trendline break-to-watch I had marked in January didn't occur until April at 474p

The second pick, BP (BP.) had a bearish set-up in January but the potential for support at 463p was there for value buyers. But in the events that transpired the bearish break did eventually come but an attempt for support at 464p failed. The stock did find support at 401.33p but the subsequent bounce has the look of a larger consolidation pattern at play. It closed Friday art 461p

For the third pick, Royal Dutch Shell (RDSA) I had made an optimistic call for a test of summer 2008 highs but in the end it was hit like BP, marking a low in March. Unlike BP this has reached (and has so far bounced from) consolidation support. Should this reverse lower then expect it to lead BP lower:

Fourth was Vodafone (VOD). The latter part of 2008 had shaped into an early rally but like the broader market this rally was quickly cut short in 2009. Since March lows the stock has formed a triangle consolidation that some may view as a bullish wedge (i.e. buy break of resistance for a potential move to 145p) or a bearish descending triangle (i.e. sell break of support ~112p for a target of ~96p). Hunch favors the latter:

Last of the five was GlaxoSmithKline (GSK). Of the five it looked like it could be the performer of 2009. Unfortunately, the stock continues to trade in its range - except this time at the lower end instead of the upper range from the start of the year. Support at 982 has at least held. A move back to resistance at 1350p is probably a best case scenario for the rest of the year.

Unfortunately, none of the five have proven their worth yet - will the second half of the year be kinder?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Lazy Summer 2% Drops

noreply@blogger.com (Declan (@zignals.com)) — Tue, 07 Jul 2009 09:49:00 +0000

Monday's drop of 2.9% in the S&P after the period of gains the market had enjoyed was a worrying turn of events for bulls. But have such falls during the usually quiet summer "vacation season" portend to something worse? I took a look at past occurences where the market has fallen more than 2% in July to see what has followed.

The first point of note is the recent phenomenon for such drops; looking at the data back to 1950 the greatest number of occurences were in the current millenium: 2008, 2007, 2002, 2001, and 2000; 2002 was unusual in there were 8 days in July which registered daily drops of 2% or more. 'Black Box' trading, broadband connections, electronic exchanges all feed into this increased volatility. Going back further we have 1999, 1998, 1996 - effectively the advent of online trading; 1996 had two days in July which experienced 2% losses.

It's not until you enter the time machine that we see truer points of market weakness, namely 1986, 1974, 1969 and 1950 - 1974 having two days of 2% losses.

What has resulted from these 2% July down days?

For the past ten years the outcome has been mostly negative with markets conforming to seasonal patterns (i.e. weak September and October). In 2001 and 2002 the 2% down day occurred around the July bank holiday weekend. Markets generally struggled to maintain bullish momentum over the rest of the summer with profit taking acclerating losses into the Fall. In defence of the bull cause, 1999 and 2002 were more range bound than disasters but holding stocks was not the favoured course of action.

Also, bulls can take comfort from 1996 and 2007 when the markets continued to work higher - although both occurrences were during cyclical bull markets, not the cyclical bear market we are currently experiencing.

However, pre-online trading the impact of the 2% down day was not so bad. Of the four years with July's containing a 2% loss there were two gains and two losses (or one gain, one loss and two sideways markets). In 1974 and 1986 the 2% down-day occurred close to the July bank holiday.

In summary, a volatile summer trading day loss has been up to the advent of online trading a rare and non-impactal event. However, in the world of online trading, black box systems, and fine margins (the latter in particular), these 1-day events have been used as cues to adopt a negative stance on the market; namely sales of existing holdings, opening shorts and holding off new buys.

In light of this it would be prudent not to fight the crowd, and instead adopt a wait-and-see approach into the seasonally weak September-October period. Perhaps then, better longside opportunities will emerge.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Charts: European Stocks in the News

noreply@blogger.com (Declan (@zignals.com)) — Mon, 29 Jun 2009 09:06:00 +0000

From Bloomberg:

Novo Nordisk added 3.3 percent to 279 kroner, rebounding from last week’s 5.3 percent drop. The European Association for the Study of Diabetes said its research into the cancer risk from a Sanofi-Aventis SA diabetes drug didn’t include Novo Nordisk’s competing product, Levemir. Sanofi, which tumbled 16 percent last week, gained 0.5 percent to 41.05 euros.

From a technical standpoint Novo Nordisk has struggled to emerge from its long standing decline. Buyers have a choice of either waiting for the next spike low or look for a momentum push past 319 kroner. Until then it's hard to be positive.

Deutsche Telekom rose 1.6 percent to 8.37 euros. Vodafone, the world’s largest mobile-phone company, is considering a bid for T-Mobile UK Ltd., the British wireless unit of Deutsche Telekom, said the person, who asked not to be identified because the discussions are private. Vodafone increased 0.2 percent to 116.4 pence

Deutsche Telekom held up remarkably well during the global meltdown in 2008 but tailed off at the start of 2009 and is struggling to find some footing. There is some potential for demand around €8s but the 20-day WMA is keeping things contained to the upside.

Ferrovial advanced 1.9 percent to 22.29 euros. Macquarie raised its recommendation on the Spanish construction company that owns seven U.K. airports to “outperform,” saying the BBA Ltd. unit “is unlikely to see refinancing risks until 2011.”

Unlike the prior two stocks Grupo Ferrovial has stabilised in a range between €17 and €27. The weighted moving average offers little help but dips below €20 are attractive accumulation areas with a potential momentum rally coming on a break of €27 with upside targets of €30 and €37. One to watch:

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

FTSE 250 (MIDD) Indecision

noreply@blogger.com (Declan (@zignals.com)) — Thu, 25 Jun 2009 10:42:00 +0000

Since the May highs the FTSE 250 (as measured by the ETF, MIDD) has been steadily working itself back to the former base between 555p and 697p (5,550 and 6,970 as per FTSE 250).

However, the challenge it faces as it lingers around 722.25p is whether it can push beyond 732.50p resistance or retreat to 697.80p. Yesterday's US Fed decision won't help the former case and the indecision currently exhibited in the market suggests the prior two days of gains are only window dressing in the broader 2-month decline.

The question is what will it do when if it makes it back to 697.80p? Too much time has passed to consider this a retest of support so the likely outcome is a drop into the former base range and a hunt for an area of demand. A drop all the way to 5550p is perhaps a little extreme given some form of rally would be expected during the interval. There was pivot action in the 635-642p range and this might be the area to watch on the part of bulls.

Buyer Beware...

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Charts: Stocktwits Top Tickers

noreply@blogger.com (Declan (@zignals.com)) — Mon, 22 Jun 2009 10:20:00 +0000

Bulls will be biting their nails with S&P futures weak; but what has grabbed the attention of traders this week?

Apple (AAPL) tops the list. Boston Wealth Management is looking at a long standing battle of the trendlines:

But over the short term it is looking better for the bulls:

Second was the Euro/US Dollar Currency pair (EURUSD). Shorts look to have the edge on the Stocktwits feed but the daily chart appears to show a bull flag with clear support at $1.38xx. I have made a call for a measured move to $1.55xx. Supply in the $1.42xxs has restrained the rally once but can it do so for a second time?

Third on the list is British Pound / Japanese Yen (GBPJPY). Pipmaestro has been peppering with short trades but the daily trend is clearly higher. Supply around £1.62xxs is a chance for shorts to get in top-end; aggressive shorting is likely to occur should £1.55xxs break.

The S&P (SPY) has been a constant on Stocktwits (interesting to see it gather more attention than the QQQQs). I haven't changed my earlier call from June 17th; still think it is heading into the $80s.

Last of the major follows is the US Natural Gas ETF (UNG). There is no firm conviction from Stocktwitters on how the sideways pattern will resolve. If it was to follow oil's lead then higher is favoured but weak seasonal effects may suppress this.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Moving forward in the SPX

noreply@blogger.com (Declan (@zignals.com)) — Wed, 17 Jun 2009 09:03:00 +0000

Last week I took a look at historical performance of the S&P as it pertained to volume. Today I will look at the position of the S&P relative to the major moving averages (20-day, 50-day and 200-day MA). In a similar vein, Brett Steenbarger had a look at the past two days action and noted a bullish bias five days out.

For this analysis I based i on last weeks standings to keep a degree of continuity. On June 8th the S&P finished 3% above it 20-day MA, 7% above its 50-day MA and 2% above its 200-day MA. The closest match was October 12th 1970 when the S&P was 1% above its 20-day MA, 4% above its 50-day MA and 2% above its 200-day MA. What followed was a sideways period which lasted just over month before it rallied for another 6 months.

Other matches were September 4th 1992 (0%/0%/2%) which experienced a 5% trim over a month then rallied for the next 18 months.

August 31st 1984 (1%/6%/5%) which evolved into a 4-month sideways consolidation before the rally continued:

August 29th 2003 (2%/2%/10%) where the S&P broke through a summer consolidation in the early part of the most recent cyclical bull market.

August 5th 1988 (1%/1%/5%). Unlike prior examples this was a little more scrappy but was still part of a larger rally (i.e. no meltdown followed):

11th October 1978 (2%/1%/10%). The first example not to show a rally to new highs, but no major low either and the prelude for April through to October was not what we have seen:

March 30th 1981 (1%/3%/5%). A step beyond above where the lead in was not well matched given the sequence of lower highs. This was the only example to follow with a new 52-week low.

Jul 21st 1952 (0%/2%/5%). The last example has the look of what may be expected over the coming months - the fact it was in July is coincidental. If the S&P was to move towards a head-and-shoulder reversal we would need to see a substantial correction this summer similar to what played out in 1952. In the current case the S&P would go from 912 down to the 800s (a 13% drop). From there if it followed the 1952 case there would be an October bottom and a rally to new 52-week highs - although the markets foundered for most of 1953 with the summer of 1954 marking the beginning of the next bull rally.

No one knows what will happen in the future. The good news is from an historical standpoint a significant meltdown to match what has gone before is unlikely to occur. But it is also reasonable to assume we won't be seeing any great push higher anytime soon.

The worst of the selling may be behind us but the cyclical bear market is far from over yet.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Latest fallond Zignals Stock Charts

noreply@blogger.com (Declan (@zignals.com)) — Thu, 11 Jun 2009 14:01:00 +0000

These picks are from a scan looking for stocks making new highs on heavier volume:

China Bak Battery (CBAK) managed a picture perfect consolidation breakout Wednesday but has run into a little follow through trouble early Thursday. A successful measured move could see this push $4.50 but the breakout gap around $2.45 might be a too enticing as a pull down. I am siding with a fall and have set a YourCall stop at early day highs.

China Sunergy Co. (CSUN) is another extended looking Chinese stock. It may play a repeat of its March rally and drift until its 20-day MA catches up - perhaps even making it back to its lower BB band. Reason enough to take some profits for those that have some to take.

The third Chinese stock to watch is China Technology Development Group (CTDC). In the short term it has the same issues as the aforementioned stocks but does at least have a base to build off. Could form a nice cup-and-handle pattern if it was to find support at the 20-day MA. Support at $2.72 an alternative entry opportunity?

Level 3 Communications (LVLT) is also looking at a potential cup-and-handle with support around $1.24 to catch a back test. Watch for volume breakout at the psychological resistance of $1.50. Project target of $2.40 if a break of $1.50 is supported.

Olympic Steel (ZEUS) is enjoying its second day of sizable gains but when the dust settles there might be a good long side opportunity. Watch the 20-day MA for entry opportunities.

All five are watchlist material.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Light volume Little Help?

noreply@blogger.com (Declan (@zignals.com)) — Tue, 09 Jun 2009 12:50:00 +0000

A post by Babak at Trader's Narrative commented on an article by William Hester on recent market conditions. In it he concluded

But there is an important nature of volume that I don’t think he took into consideration. Everything else being equal, volume tends to be cyclical and follow a pattern. For example, it tapers off during holidays like Christmas and New Years (yellow squares on the chart). Volume is light from June to August - what is referred to usually as the summer doldrums. And it spikes for panic lows (you can see a few examples above).

But is there anything we can look to from recent low volume?

I started from using June 8th 2009 as a base; on Monday the amount of volume traded was 32% below a 60-day moving average of volume. In the prior week volume traded between 6 and 21% below the 60-day moving average of volume. So looking back to 1950 how many days in June did volume trade below the 60-day MA of volume by 30% or more?

The majority of these cases occurred in the late 50s and early 60s with large number of light volume days populating June. But there was a dramatic shift from 1979 to 2009 with only the odd day here and there and no light June trading day in the nineties.

How did the S&P perform during these periods?

I tried to group the performance into general associations. The first group of five enjoyed periods of continued strength into the end of July or beginning of August before entering a downward phase lasting into mid-September and October. Only in 1988 did the rollover occur early and bottom at the end of August.

The next group of five had sustained periods of weakness for June or mid-July, but this was followed by significant rallies where the June/July low reflected the absolute low for the following 6 months.

And then there was the odd cases which didn't really fit any pattern (although 1976 could probably muscle into the 'June low and rally' group)

So is there anything we can take from this?

Not really. There is nothing to suggest very light volume as part of a seasonal light trading period reflects underlying weakness. In the case of light June trading there is perhaps a greater case to be made in favour of a consolidation lasting to the end of June/mid-July before markets kick into a significant push higher - but it's a weak case.

However, with the exception of 2001, there was no strong evidence to a significant market meltdown and certainly no move which made a substantial undercut of June prices.

So, seller beware.

In my next article I will look at how the relative position of the S&P to its moving averages combined with light volume influence future price action.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

The 'Sucks' Indicator

noreply@blogger.com (Declan (@zignals.com)) — Tue, 02 Jun 2009 10:32:00 +0000

In the true traditions of in depth analysis I did a simple survey on Google Trends for the search term "sucks" and an associated company name. I initially wanted to look for attitutes to Google's Adsense program but there wasn't sufficient data to return an answer (censorship or simply a win-win product?), so the search was broadened to improve results.

The first comparisons were between Google, Microsoft and Yahoo. Google experienced the most 'suckage' by virtue of its size. The 2008 spike may have corresponded to the changes in its advertising TOS, but it didn't appear to impact the company over the long term and in general, the company has been irking people less since the start of 2006

Microsoft has been steadily improving while Yahoo has headed in the other direction; one only has to look at the comparison in the two's stock price to see how each has fared with investors.

The rise and fall of Crocs (CROX) has made for interesting viewing (assuming you hadn't ridden it up and back). Crocs peaked in search during July 2007 before plummeting; interesting headline from September 17th which came a month before the stock price collapsed.

Unfortuntely, applying the 'Sucks' thesis to teen fashion didn't return an awesome list of results. In the broader terms of search, Abercrombie held top position (and was used as a marker for all comparisons) but is facing pressure from Hollister. Juicy Couture has seen steady growth, albeit from a lowly position. Certain brands like Diesel and Hurley were excluded where there were obvious multiple meanings and the fashion brand did not represent the dominant search term.

One thing Google Trends shows nicely is the various seasonal shopping peaks; look at the difference between boom loving 2007 (denial) and the crisis weary 2008 (acceptance). Minor peaks are seen for Spring and Fall - even for Spring 2009. What will Fall 2009 bring?

On a closing note, although weaker than Abercormbie and Hollister, Urban Outfitters was able to maintain the majority of its (lower) sales in 2008 from 2007 and hasn't suffered to the same degree as Abercrombie or Hollister. Is Urban the new teen fashion star?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Charts: GLD, DBA, DBC and EURUSD

noreply@blogger.com (Declan (@zignals.com)) — Tue, 26 May 2009 09:21:00 +0000

There has been considerable action in the quartet of commodities and EURUSD prices the past couple of weeks. Each are shaping up for even bigger moves, but how will they do?

First up is the Gold ETF, GLD. The initial call remains valid with the head-and-shoulder reversal pattern within a head-and-shoulder pattern. One could make a case for a short term reaction support at $90.14 which would allow for a breakeven stop on my May 6th call at $89.72. Miners have already begun the journey but it could be weeks before the base metal follow suit.

Maoxian has been following an Ag fund (DBA) and a more general commodity fund (DBC). DBA has emerged from an 8-month base and has room to move into the $33s.

The Commodity Index Tracking Fund (DBC) hasn't got the same juice powering it as the Ag-based DBA so it is still range bound. I have entered an anticipatory YourCall for a push to $27s with a stop on a loss of $21.

Currency fave EURUSD has been bubbling of late. A March call of mine didn't reap the reward I had looked for eventhough the direction of the move was correct. In the end the break of $1.3739 was the icing on the cake of a somewhat crude 'cup-and-handle'. Now it exists in a bit of a no-mans land between $1.3739 and $1.4141; the latter a beginning of a supply zone stretching into the $1.43s. The best outlook going forward is to have this backtest $1.3739 before an assault is launched on overhead supply.

As the indices work off overbought conditions into their traditional quiet season these aforementioned ETFs and currency pair may be the ones to watch over the next few weeks.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Charts: Three Gold Miners

noreply@blogger.com (Declan (@zignals.com)) — Thu, 21 May 2009 09:58:00 +0000

Gold bugs have seen a steady improvement in the commodity pricing with the recent price cross of its 50-day MA and the subsequent cross of this moving average by the 20-day MA. However, the best form has emerged from some of the gold mining stocks. Here are three worth watching; two of which have YourCall information.

The first to emerge from a 9-month cup-and-handle pattern is Gold Fields Ltd (GFI). The break beyond $12.63 hasn't cleared all trouble given reaction lows from early 2008 at $14.00 will continue to act as supply. The potential 1-year target is last October's highs at $18.22. I have a YourCall for a push to $18.19 with a stop at $11.69.

The second stock, Golden Star Resources (GSS) has advanced almost 100% from April lows so is perhaps in need of a consolidation period before pushing on. The Cup-and-Handle may make more sense as a "W" bottom but the prognosis going forward is the same. I have a loose YourCall entered with a Target of $4.25 but a broad stop at $1.69. It will be a slow burner.

The final stock of the three, Kinross Gold Corp (KGC) hasn't broken from its base and is still penned in by resistance at $19.49. I have not entered a YourCall on this but an Alert for a Price Cross of $19.49 should suffice.

Keep an eye on all three...

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Bank of Ireland Chairman steps down: Where next for Irish Banks?

noreply@blogger.com (Declan (@zignals.com)) — Tue, 19 May 2009 09:36:00 +0000

A plan by Bank of Ireland to buy back bonds has seen its share price rise 27 per cent despite reporting a collapse in pretax profits to €7 million and lifting its expected three-year bad debt charge to €6 billion.

The buyback programme also overshadowed an announcement that chairman Richard Burrows would step down at the annual meeting in July.

Irish Times

Shareholders have given this latest news a thumbs-up which has also helped other Irish banking share prices. But where can Bank of Ireland go from here?

Until the start of May, Bank of Ireland had been struggling to challenge €1.00 resistance. The eventual break on May 6th, albeit on very low volume (surprising considering) was the prelude to the advance seen today. Those brave souls who bought at €0.12 as recently as March must be feeling very good about themselves.

In terms of volume, the bulk of the buying occurred in the €0.40-€0.95 range and this should be the zone with the greatest level of support should the current rally run out of steam (an excellent example of resistance turned support).

Going forward the next major congestion level is around the €4.38 and €6.36 zone but there is a resistance level at €2.30 which needs to be tackled first. It will likely be a long journey to get there but as long as Bank of Ireland can stay above €1.00 there is hope.

For Allied Irish Banks it's a different story. Today's news as helped add another 14% to AIB's share price but a larger hurdle remains as to its range bound action between €0.74 and €1.36. Even when this clears it will run into significant supply level at €1.67. Only when the latter breaks (if it breaks) can one start to consider the long term prospects for the bank.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Global Indices ETFs Round-Up: 20-day Weighted Moving Average

noreply@blogger.com (Declan (@zignals.com)) — Thu, 14 May 2009 09:43:00 +0000

With the 'Joe Soap' regular 20-day moving averages broken or under threat I took at look at the positional aspect of the weighted 20-day MA. Like any moving average it is subject to whipsaw but breaks through the line tend to support bullish or bearish periods of 1 month or more. However, because it is weighted the whipsaw signals don't tend to be so damaging.

[1] S&P/SPY

Closed Wednesday just above the 20-day WMA. Another down day Thursday will see a break which could define the action for the rest of the summer with the potential for another seasonal washout in September/October. That's hearsay for now but today will mark the test.

My 1-month Call for $94.49 fell shy of the target but did at least finish in the plus column.

[2] FTSE 250/MIDD
Thursday marked a break of the 20-day WMA as the Spring rally falters. Below 685p there are two bands of potential support; an upper tier between 675-685p and a lower tier between 575-600p. Each can be used to take partial profits/profits on a maturing downphase.

I have put a YourCall for a move to the upper tier - but with the risk I have defined it's not really worth it on current pricing and whipsaw remains a concern.

[3] ISEQ/0ESE

The much maligned Irish Stock Exchange has suffered considerable pain but there is evidence the worst is behind it (even if the Irish economy has yet to see it). The exchange suffered more than others in false dawns. Currently the exchange sits right on its 20-day WMA. For it to hold would be a major achievement, but it is likely to follow the FTSE 250 lower; this would leave punters looking at €4.15 for a measure of support.

[4] Nikkei/EWJ

Thursday's sell off in the Nikkei is likely to take this back to the 20-day WMA. Supply lurks around $9.77 but a break above psychological $10 could see a move to $10.90. The expectation is for the Nikkei to break its 20-day WMA and at least shift sideways over the summer months

[5] BOVESPA/EWZ

While global markets were shifting around in the latter of 2008 and the early part of 2009 the Brazilian index was relatively stable if somewhat whipsawy. The global correction is likely to see it lose its 20-day WMA but the groundwork on the part of bulls looks more favourable than for any other of the aforementioned indices. Should see good support in the $41s.

[6] Mumbai/PIN

While not a direct correlation to the entire Mumbai SE it's a reasonable approximate. Behaving very similar to the Brazilian ETF with a neat double bottom for November and March lows. Unlike US and UK markets this has managed to test September 2008 lows (as did the Brazilian EWZ). On a relative scale it is outperforming the S&P and FTSE 250. On that basis it should be the first to rise through its 20-day WMA if current support fails to hold.

Looking at these six indices it would appear the best prospects going forward are in the emerging markets.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Two Stocks and an ETF Fom The Blogosphere

noreply@blogger.com (Declan (@zignals.com)) — Tue, 12 May 2009 10:22:00 +0000

Running through my various blogger feeds and picked out a few stocks receiving attention.

[1] NABI Biopharmaceuticals ($NABI) from X3 ETF Hell. CPL says:

Anycase, since they revised their quarterly results it's appearently in worse shape than previously thought. I'm expecting tha it's going to challenge it's 52 week low. If the market is switching into back to basics investing. Poorly recieved results will be punished and with nothing really holding this market up except hope and faith if enough bad quarters are reported, the bottom should drop out again. Until then, keep an eye on this one.

Set a Zignals Stock Alert for break of $2.75.

[2] The Mole at PaddyPowerTrader.com noted this about Allied Irish Banks ($AIB)

A grim trading statement from AIB yesterday evening, ahead of Wednesday’s AGM/EGM. What leaps out on a first read is the sizable increase in bad debt expectations since the March results. In a relatively short period, the bank has seen its “stressed” bad debt assumptions become central for 2009, significantly exceeding the “base case” illustrated previously. The €4.3 billion estimate bad debt charge (325 bps) is significantly ahead of the €2.5-€2.9 billion base case presented at the full year stage in March. It is also outside the €4 billion stress test scenario shown at the time of the results, implying that AIB is at worse case scenario, or the worse case they felt comfortable in presenting. The trouble coming down the track is also increasing at pace, with Group criticised loans ec(watch, vulnerable and impaired) increasing to c. €24.3 bn, up €9 bn. It implies that criticised loans at group level have increased from 11.7% of total loans (€15.5 billion) to 18.4% of the book at €24.3 billion.This is a nasty wake up call for AIB for what had previously been a glass half full bank

Set a Zignals Stock Alert for break of €0.75.

[3] Nasdaq 100 Trust ($QQQQ) has gathered interest as it knocks around its 200-day MA. Here is what HCPG Blog had to say about it:

Note today that the QQQQ is in a peculiar spot: in a little box under the trend-line but bouncing for the second day in a row on the 200 SMA.

On the upside it still has room to 36 until next major resistance and on the down-side, selling might pick-up on any hard break of the 200 SMA or break of the 2 day low around 33.85. Our thoughts are that sentiment is still very bullish and any significant selling in tech (for example a move to 32) would be a good buying opportunity.

Set a Zignals Stock Alert for a Price Cross through 200-day MA.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Chart: United States Natural Gas Fund

noreply@blogger.com (Declan (@zignals.com)) — Fri, 08 May 2009 10:56:00 +0000

$UNG United States Natural Gas Fund has attracted plenty of interest on its recent rise in volume, although it is difficult to see where support lies beyond the most recent reaction low of $12.70

Some may look to the $14.45 level to hold or the $15 area which was resistance for the early part of April. I have not entered a YourCall for this although risk:reward shows potential targets of $18.23 and $26.00.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Charts: Commodities Bottomed

noreply@blogger.com (Declan (@zignals.com)) — Wed, 06 May 2009 09:49:00 +0000

The collapse of commodity prices through the latter part of 2008 looks to have stabilised in the first half of 2009. A number of bullish reversal patterns are emerging in commodity price charts which may make them attractive over the coming months.

First up is Gold (GLD). An earlier update had pointed to the breakout from the bull flag but what I had mentioned was the dual reveral head-and-shoulder patterns from which the bull flag consolidation emerged from.

Whatever your aspirations are for gold it would appear $84.75 support is critical. I have a YourCall for a push to $118.69 with a stop at $84.49.

Oil has emerged from its slump although the contango'd(?) ETF, USO, has only started to show signs of life. A push to $40.27 is a possibility. I have set a YourCall with a target of $39.99 and a stop at $26.89. In reality, when oil hits $70 a barrel it will probably be time to take some profits with USO at whatever price it's trading at.

The base metal ETF, DBB, broke resistance and a triple bottom in March and is shaping a possible cup-and-handle pattern with two resistance levels; one at $14.89 and a second at $15.75. The long term target is $23.50 but it will probably take longer than a year to get there, especially as the economy is showing no signs for a rapid rebound.

Add your opinion at Zignals.com.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

TickerSense Blogger Sentiment Poll: Accuracy and Opinion

noreply@blogger.com (Declan (@zignals.com)) — Tue, 28 Apr 2009 13:12:00 +0000

The first two articles looked at how participating blogger opinion on future S&P moves (see my prior post for how opinion was calculated) matched the actual moves of the S&P. However, this opinion was not correlated to call accuracy. In this article blogger opinion is compared to the accuracy of such calls.

Accuracy was based on a 30-day outlook for the S&P; a successful bullish call matched an S&P gain greater than 1%, a bearish call for a loss more than 1% and a succesful neutral call was for an S&P gain or loss of within 1%. Each of the five test periods, or replicates, had 21-22 polls; each replicate had a call accuracy percentage and an opinion ranking.

In the most recent replicate (October 2008 to March 2009) Elliot Wave Lives On was the most accurate caller at 61% followed by Wishing Wealth at 59%.

In the 40% accuracy zone was myself, 24/7 WallStreet, Information Arbitrage, Crowder Blog, Traders-Talk and Jack Stevison.

Based on the data from all five replicates the level of accuracy plotted against variance showed a wide spread. There was a group of four blogs which had low accuracy and low variance; Millionaire Now, Word on the Street, Controlled Greed and Infectious Greed. However, Infectious Greed and Word on the Street rarely participated in the Poll so there isn't the depth of data to support their positions. Shark Report had low accuracy but high variance. Self Investors had a middling accuracy and the lowest variance. Jack Stevison had the best accuracy relative to his variance with Crowder Blog having the highest accuracy of all participating bloggers (but his variance was fairly high too).

When blogger opinion was plotted against blogger accuracy a slightly different picture was drawn. A group of four bloggers; Wishing Wealth, Traders-Talk, Jack Stevison and Crowder Blog all had predictive opinions close to that of the S&P and were reasonably accurate. In contrast, Controlled Greed's predictive qualities were on track, even if on a call-by-call basis they weren't so accurate. Most off-base was Learning Curve.

In summary, Crowder Blog and Jack Stevison come out well in both instances; most in tune with the future moves of the S&P and good accuracy on calls. But which is more important? In my next post I will compare the potential profit from following the most accurate call makers with trades made on blogger opinion alone (irrespective of accuracy and a more likely real world scenario). Will opinion top accuracy?

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

TickerSense Blogger Sentiment Poll: Part II

noreply@blogger.com (Declan (@zignals.com)) — Wed, 22 Apr 2009 11:57:00 +0000

If you haven't already done so please read Part I which establishes how the calculations were done for this particular piece. In the haste to get Part I out I neglected to point out one key weakness of the calculation. Because an average score for each time period is used it is possible for a blogger to be 'in sync' with the market but to do so from a diametrically opposed standpoint; for example, if the S&P was bullish for the first five polls and bearish for the following five its average score is zero. Over the same period if a blogger was bearish for the first five polls and bullish for the last five (s)he would have the same average score of zero. This discrepancy can be solved using an accuracy measure for each call, as I have done in the past. I will be integrating this data into Part III of this article.

But in this part I will be expanding on blogger sentiment from the net average score for all time periods combined into blogger sentiment for each of the five time periods. A 'time period' contains the results of 21-22 TickerSense Polls. The score ranges from 0-200; a score of 0 represents Blogger's sentiment in tune with the performance of the S&P over 30-days post call (but it does not relate direct call-to-call accuracy); the higher the score the more incorrect a particular bloggers' opinion was on future S&P performance compared to actual S&P performance.

The first group of bloggers, Wishing Wealth, Traders-Talk, Controlled Greed and Information Arbitrage all had a high affinity to future S&P's moves. Wishing Wealth opinion was closest to that of S&P performance but it was Information Arbitrage which performed strongest over all five periods. His only period of weaknes was between April and October 2008 in part because he participated in only four polls during this period.

The next batch of bloggers were more mixed in performance. Elliot Wave Lives On and Dash of Insight both had similar patterns of opinion with Elliot Wave Lives On more in tune with the market based on most recent data.

The next batch of bloggers were more variable in their opinion. Most improved was 24/7 Wall Street followed by Millionaire Now. Drifting out were QuantInvestor, Shark Report and Peridot Capitalist.

The outliers had their moments with LearningCurve the most consistent 'off' the market.

The true story won't be known until accuracy is considered as part of the equation but the calls of Information Arbitrage are one to follow closely. He was bearish for S&P performance over the next 30 days. Wishing Wealth was also bearish.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

TickerSense Blogger Sentiment Poll: A look at the data

noreply@blogger.com (Declan (@zignals.com)) — Mon, 20 Apr 2009 15:15:00 +0000

In the past I have looked at the performance of the participants in the TickerSense Blogger Sentiment Poll. While the results as a whole have not generated a predictive outcome if they are broken down by individual blogger then some do perform better than others.

In the first part of this examination I will compare the deviation of the net bullishness or bearishness of the blogger with respect to the S&P over five periods; Dec06-Apr07, Apr07-Sep07, Oct07-Mar08, Apr08-Oct08, and Oct08-Mar09. This is different to what I did before when I looked at accuracy - but this will be a later post.

In each of the aforementioned date ranges are 21-22 data points. Each data point was an individual TickerSense Poll. The Poll asks participants if they are bullish, bearish or neutral for the S&P the next month. I assumed a neutral call to be a S&P change from Monday's open to the closing price 1-month later of between +1% and -1%; a change greater than 1% was considered bullish while a loss lower than -1% was bearish.

Each blogger's call on a week was assigned a value; if they were bearish on a given week they got -1, if they were neutral they got a 0 and if they were bullish they got +1. So a blogger who made 22 calls would have 22 values of either -1, 0 or +1. I did the same for the S&P, i.e. If the S&P closed higher a month later the initial date got a score of +1, if the change was between -1 or +1% it got a zero and if it lost more than -1% it got assigned a value of -1. So, like the bloggers the S&P got 22 values between -1,0,+1.

I then summed the values for each blogger and the S&P and expressed each as a value between -100 and +100. Eg. If a blogger had made 10 calls; 3 bearish calls (-3), two neutral calls (0) and five bullish calls (+5) their score would be (-3)+(0)+(+5) = +2 / 10 = 0.20 * 100 = +20.

Each of the Blogger scores had the corresponding score of the S&P subtracted from them (the score for the S&P was calculated in the same way as for bloggers except it was performance, not prediction, which is measured).

Bloggers who matched the S&P perfectly on a given time frame would have a difference of 0. Bloggers who were off would have a maximum difference of 200. Absolute values were used to standardize the difference.

It should be noted, this does not measure the accuracy of the calls Bloggers made, it simply reflects their general 'feel' for the market over each of the time frames. It also doesn't take into account the variation in the number of calls made. The latter point is important as the S&P will always have the maximum number of counting variables in its score (21 or 22), but some of the blogger scores are drawn from only five or six calls over the same period.

The first thing I looked at was the Average Difference between Blogger opinion and S&P Performance for all time periods. Crowder Blog, Traders-Talk, Jack Stevison, Wishing Wealth, Knight Trader, Self Investors, CXO Advisory, and HedgeFolios had only three qualifying periods, the rest of the participants had five.

What was interesting from the initial data crunch was the clustering of the bloggers. Wishing Wealth was most 'in sync' with the market (again, this is an average different to the S&P and does not reflect call accuracy) followed by a cluster of bloggers, Information Arbitrage, Controlled Greed and Traders-Talk around the 30 mark. LearningCurve was the most out of sync with the market. The cluster in the 60-80 range offered no edge on the market.

Tomorrow I will look at the data with respect to time; this will show the shift in performance by 'bullish' or 'bearish' bloggers as markets went from the bull market of 06-07 into the bear of 08-09.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

S&P Stocks Above 200-day MA

noreply@blogger.com (Declan (@zignals.com)) — Wed, 15 Apr 2009 11:05:00 +0000

With more a more S&P stocks trading above their 200-day MAs (17% as of yesterday compared to sub-10% dating back to October 2008) it is looking increasingly likely the lows of March will mark a significant bottom for the rest of 2009 and maybe the bottom for the current cyclical bear market.

But what of the stocks making the grade?

S&P Stocks Above 200-day MA: 83
Daily ADX (14) greater than 20 (i.e. 'trending') &
Daily +DI for today is greater than Daily -DI for yesterday (='bull trend'): 64
Weekly Close for last week is greater than Max High over 4 weeks: 40
Close is less than Upper Bollinger Band: 39
Close is less than 3% but greater than 1% from 20-day MA: 2

The two stocks are?

Affiliated Computer Services (ACS)

I have entered a YourCall for a move to $54.99

And

Cintas Corp (CTAS)

I have entered a YourCall for a test of September resistance with a stop below the small handle lows of $23.95.

Given the overbought nature of the S&P in the short term there is a chance 20-day MAs will break which will give the next buying opportunity at the 50-day MAs.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Short memories? Wells Fargo "Profit"

noreply@blogger.com (Declan (@zignals.com)) — Thu, 09 Apr 2009 14:20:00 +0000

"Wells Fargo projects record $3 billion 1Q profit" or have investors forgotten about the $25 billion bailout the bank received? Not that it mattered; markets have taken this as a positive and pushed an early 3% gain. WFC gapped well over resistance and although down from its open is nicely positioned to challenge $21.45 resistance.

Ignoring the 66% of Nasdaq stocks trading above their 50-day MA which suggests an intermediate top marking a 3-6 month high is imminent (bear market tops typically occur when 60% or more of stocks trade above this average), there is a nice play at work in the semiconductor ETF. The past 4-months of consolidation looks to be history and there should be good demand on any drop below $19.30. Next resistance around $21.10. I've made a whimsical call for a push to resistance with a stop below $19.30; register to make YourCall.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Gold and Silver under Pressure

noreply@blogger.com (Declan (@zignals.com)) — Tue, 07 Apr 2009 09:35:00 +0000

In late January I took a look at the prospects for Gold and Silver. I had mentioned how resistance for GLD at $92 marked a convergence of declining and horizontal supply levels and had the potential to be a tough egg to crack. In the end, GLD found it relatively easy to break through without the need to consolidate, reaching an eventual high of $98.99.

However, since the high it has run into a little trouble.

The rising support marked from January was breached in early March. Gold further laboured to hold horizontal support around $88. Yesterday it cracked and broke the latter price and now looks destined to test $78.85. Gold Bugs will continue to advocate for a break of $1,000/oz ($100 for GLD) but with the depressed nature of commodity prices, not to mention the struggles in other precious metals, it's hard to see this break happening anytime soon. Add to the mix a bottom in commodity prices occurs after bottom in stock prices - and we are still waiting for the latter - it doesn't look good for gold in the near term.

Having said that, a protracted sideways range for GLD with support around $66 ($660/oz) doesn't seem unreasonable. However, I have made a call for a push to $78.85 with a stop on a return above $88.

Where I felt there was room for maneuver was in Silver prices (SLV). Silver handily reached August / September reaction highs following its January breakout. But has since run into the dual problem of a failed breakout (of August highs) and a break below its 50-day MA. It's very close to the former resistance line which marked the January breakout but is perhaps more likely to reach the double bottom neckline around $10.67.

Silver looks to have more long term support to work with than Gold. The $8.45-$10.65 range should be well defended but we may yet not have seen the bottom for the metal.

When the speculative fervor declines (for Gold in particular) then might be the time to start buying some upcoming inflation protection. For now it's sit and wait for the stock and commodity bottoms to complete.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Technical Analysis: Market Breadth

noreply@blogger.com (Declan (@zignals.com)) — Mon, 06 Apr 2009 15:59:00 +0000

The last seminar in my series given to the MBA students of Trinity College Dublin. There is a token portion on Money Management at the end but the core of it covers Market Breadth.

Regular posting to resume soon.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Technical Analysis: Japanese Candlesticks

noreply@blogger.com (Declan (@zignals.com)) — Tue, 31 Mar 2009 10:50:00 +0000

Next in the series of presentations; as before the animations don't show on the chart as all overlays are displayed at the same time.

Last seminar will be next week at 12:40pm

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website

Zignals Stock Chart: EURUSD Bull Flag

noreply@blogger.com (Declan (@zignals.com)) — Thu, 26 Mar 2009 10:25:00 +0000

Last Wednesday I commented on the mounting pressure against $1.29 resistance which suggested a potential break was coming. The trigger for the break was the Fed decision to buy back its debt.

The latest scenario to wobble the dollar came from Tiomthy Geithner's suggestion he was open to a global currency. He later corrected himself but the 'worry' is lingering within a technical pattern which is considered bullish (for the euro / bearish for the dollar) termed a 'bull flag'.

The pattern has strong measuring implications and should clearly defined resistance break then the dollar could be in for another sharp period of pain, not helped by Timothy's comments floating in the air.

The projected target is for another $0.1283 to be added to the point of the bull flag breakout. If we use $1.3783 as the resistance price then the upside target for the EURUSD is around $1.5066 - although this target is likely to be a little lower given the bull flag will break before $1.3783 is cleared. Looking at the chart there is an historical resistance level from last August and September at $1.4909 and $1.4868 respectively; this looks to be a more reasonable projection to call.

The risk for the position is below $1.3400

I have made a fresh call for the EURUSD available here.

Dr. Declan Fallon, Senior Market Technician, Zignals.com the free stock alerts, market alerts, and stock charts website