Indices News

By, James A. Hyerczyk The rally was laborious, but the FTSE 100 managed to trend higher on Monday, taking out the previous day’s high and finishing higher. This type of move is often indicative of topping action since it signals a possible lack of conviction amongst traders. Technically, overbought conditions following last week’s major rally may also be causing traders to be hesitant at current price levels. This makes sense since the charts indicate limited room to the upside and plenty of room to the downside. The longer-term charts suggest the following scenario. The main range is defined as 5075.20 to 5602.80. This range has created a retracement zone at 5339.00 to 5276.74. If buying power dries up at the current price level or if short-sellers re-emerge, look for the FTSE to correct back into this retracement zone. Traders will have to decide at that point whether the market has reached a value zone or if the market is going to continue...

By, James A. Hyerczyk The poor performance by the FTSE 100 the last two sessions following the spectacular mid-week rally was a clear indication that strong buyers failed to emerge during this seemingly weak attempt to finish the year on a high note. Friday’s closing price reversal top is another sign that this index still has some work to do on the downside. Despite the powerful rally last Wednesday, the FTSE never changed the main trend to up on the daily chart. The significance of this is that investors failed to take out any major tops, which leads one to believe that this entire rally was driven by massive amounts of short-covering. Clearly, investors aren’t interested in buying strength and that a retest of the recent low may be necessary to form a support base or at least identify some kind of a value area. Based on the short-term range of 5075.20 to 5595.50, the charts indicate a move has begun that could...

by, James A. Hyerczyk The E-mini S&P 500 futures contract formed a bottom at 1147.50, completing the uptrending support line of a triangle chart pattern on the 1440-minute chart. This action led to a spectacular rally which reached a top at 1262.75. This completed the resistance line of an emerging pattern. Autochartist indicates the contract may straddle the extended resistance line. A case can be built, however, for a possible retracement of the entire rally. The overall quality of the chart pattern is a below average 4-bars. The initial trend is rated 1-bar. This indicates a weak uptrend prior to the formation of the chart pattern. The uniformity rating measures the strength of the touches or near touches of the support and resistance lines. In addition, it looks for equidistant support and resistance lines. The clarity rating is a below average 4-bars. A high number of “market spikes” may be the reason behind this relatively low rating. The triangle chart pattern is a...

by, James A. Hyerczyk The FTSE 100 took a breather on Thursday after the previous day’s huge run-up. This was expected since short-term indicators showed extremely overbought conditions. This flat trading action is further evidence that most of Wednesday’s rally was short-covering and that not many traders were interested in buying strength given the plethora of negative news influencing the markets. Looking at the big picture, the main range is defined by the October top at 5747.30 to the November bottom at 5075.20. This range has created a retracement zone at 5411.25 to 5490.56. Two consecutive closes over this zone is a small sign that maybe there is a bid out there, but it probably means that short-traders are still licking their wounds after Wednesday’s wicked trading session.  If support can be established at this zone then the market may attempt another move to the upside. The short-term term outlook indicates that overbought conditions and the lack of buyers at current levels means...

by, James A. Hyerczyk The FTSE 100 soared to the upside as central banks pumped liquidity into the markets. The vertical move in the index was triggered mostly by short-covering, but the inability to even mount a serious intraday reversal to the downside was a sign that a firm bid was also supporting the rally. Technically the upside momentum was impressive as was the volatility. Based on the last break from 5747.30 to 5075.20, the first upside target was the retracement zone at 5411.25 to 5490.56. This zone was penetrated easily as the market surged to an intraday high at 5538.96. The close at 5505.42 put the index on the bullish side of the retracement zone, suggesting that further upside action was likely on Thursday. Whether traders believe the move by the central banks is to be short-lived will be determined by how the market reacts as it approaches the October top at 5747.30. Now that the index has cleared the retracement zone,...

by, James A. Hyerczyk The FTSE 100 index inched higher on Tuesday but the intraday trading was volatile. With the main trend down, the current two-day rally has most likely been short-covering. Without the formation of a solid support base, any rally is likely to die out especially if the corrective top ends up inside one of two major retracement zones. The main range is the October top at 5747.30 to the November bottom at 5075.20. This range has created a major retracement zone at 5411.25 to 5490.56. The secondary range is 5616.00 to 5075.20. The secondary retracement zone is 5345.60 to 5409.41. The combination of these two retracement zones creates an important resistance cluster at 5409.41 to 5411.25. With the main trend down, a test of the resistance cluster is likely to attract fresh shorting pressure. Minor support may develop at 5209.69 to 5177.95 on the way back down, but once this area is violated, down side momentum may increase which drives...

by, James A. Hyerczyk Oversold conditions and fresh news from Europe helped trigger a short-covering rally in the FTSE 100 on Monday. Friday’s closing price reversal bottom on the daily chart was actually the first clue that this stock index was poised for a reversal to the upside. Although the up move is impressive, the index is far from changing the main trend to up and is more likely to be setting up another shorting opportunity once it completes a 50 percent to 61.8 percent retracement of the last break. Based on the short-term range created by the November 8 top at 5616.00 and the November 25 bottom at 5075.20, the first upside objective is 5345.60 to 5409.41. From the October 27 top at 5747.30 to the November bottom at 5075.20, a retracement zone has been created at 5411.25 to 5490.56. The combination of the two retracement zones suggests a resistance cluster has been formed at 5409.41 to 5411.25. Since the main trend...

by, James A. Hyerczyk The FTSE 100 closed higher on Friday after nine consecutive sessions of losses. Oversold conditions on the daily chart definitely played a role in the market’s turnaround. Thin trading conditions and low volume because of the U.S. holiday the previous day and Friday’s shortened trading schedule may have also played roles in the turnaround. Intraday trading was wicked with the Index treading water near its low then exploding to the upside in a massive short-covering rally. Short-traders regained control of the situation, driving the market off its highs but failing to push it back lower for the session. Technically, a short-term bottom may have been reached, but this move should not be construed as a change in trend. Without the formation of a solid support base to launch the next rally, short-traders are likely to refresh positions after a sizeable retracement to the upside. The chart formation suggests the market may be ripe for a 50 percent correction of...

by, James A. Hyerczyk After reaching a bottom at 5365.30, the Germany 30 (DE30) index has created a base at this support level, setting up a possible retracement of the break from Point B to the bottom. Autochartist has detected the formation of a 3-Point Extension Fibonacci pattern. Although the main trend is down because of the lower-top, lower-bottom chart pattern, Autochartist is suggesting the start of a possible counter-trend rally into a series of Fibonacci retracement levels ranging from .382 to 1.618. The 3-Point Extension Fibonacci pattern is a symmetrical pattern. This means that there is a price and time relationship between the rally from Point A to Point B and the break from Point B to the new support level. This is what allows Autochartist to make an accurate price forecast. The 3-Point Extension is also comprised of the basic Fibonacci ABCD or ‘lightening bolt” pattern. When compared to the 3-Point Retracement Fibonacci pattern, one will notice that the 3-Point...

by, James A. Hyerczyk The FTSE continued to weaken on Thursday under thin trading conditions because of the U.S. market holiday. The down move was a demonstration of the same orderly break that has taken place over the past 6 to 8 days. This systematic liquidation indicates that sentiment is clearly pointing down with the index clearly in the grasp of bearish traders. As momentum and volatility expand so has the price range with the market trading at levels not seen since early October. Several days of compressed support and resistance levels has yielded a much wider trading range. Fresh selling pressure is likely to continue to trigger weak stop loss orders under former bottoms, expanding the daily ranges even further. Currently, index traders appear to have their eyes set on the psychological support barrier at 5000.00. A break though this level may trigger an acceleration down into the October bottom at 4868.60. It is at this level that things could get more...