IBEX 35 - Free Fall?

IBEX 35 – FREE FALL!

Today we look at the Spanish Stock Market index, which is the IBEX 35. After the FOMC release of yesterday and the ECB’s uncertainty in economy growth, this index has continued its plunged.

But apparently, it’s been going on for a while. Until this year, we had always thought that the IBEX replicates the movements of the Dow Jones and the S&P. Well, it doesn’t. The Dow went above 13.000 and the S&P above 1.400 and the IBEX has been trading in the opposite direction.

Let’s take a look at the Elliott Wave counts. We’re right now in a downward trend, probably riding wave 5. At this drop speed, the IBEX doesn’t look like it could hold and bounce at its current best support level, which is 7.500. We believe that if it holds there, it’s just a brief pause and will resume its downtrend to 7.250 – 7.100.

Right now, Spain is going through a very difficult moment and all the measures taken by the new Government are not inspiring any confidence in foreign markets.

It’s just a matter of time until Spain bounces back. From all the Latin economies, it is still a safe one and although the picture looks ugly now, we’ll watch it closely for future trading opportunities.

Trade safely. Trade with discipline.

Dow Jones - rise without noise (Heiken-Ashi)

Hello again!

Today we are going to take a peek at the Dow Jones Industrial Average chart (charts courtesy of Stockcharts.com).

In order to take away the noise and filter the correct market trend, we use, this time, the Heikin-Ashi candles. As we can see, around 1720h GMT, the DOW is at 13.250, with a low for the day of 13.224 and a high of 13.265.

The trend is intact and clearly upwards. Although we could see a minor pullback and the Stochastics are also confirming this possibility, the rise will continue for a bit.

The first area the index must break is the 13.275 level. Once that is broken, we could see a continuation to the 13.300 zone with a minor zig zag.

The 20 MA is currently at 13210 which could be a support on the lower side.

Trade safely. Trade with discipline. 

SPX - Riding Wave 5 and Technical Breakout!

Good morning and a good start of the week to everyone.

Our comment of the day is based on the rise in US Stocks after Bernanke’s premarket comments.

The head of the Fed has signaled that the central bank is committed to a monetary policy that’s helped buoy stocks for three years. Many experts are expecting another round of QE coming up soon.

On the 60 minute chart of the Standard & Poors 500 index (SPX), we can see how the index is riding Wave 5 on the Elliot Count after a breakout. Good choice on those who decided to buy below the 1400 mark which has proved to be a good support.

Should the buying mood continue for a few sessions, we could see another 15 to 20 points up this week. After that, the bull trend should stall for a few sessions allowing for corrective wave A to come and resume another mini rally.

Our first mark to follow is the 1415 level. After that the index could shoot up further allowing the bulls to enjoy their ride.

Trade safely. Trade with discipline.

@AmarDaryanani

Citigroup - breaking an ascending triangle.

Once again, we look at the Banking sector. This time let’s take a peek at Citigroup, Inc. Citi, has performed very badly since they executed their reverse split in 2011 having their share price fall all the way to 21.40$ from a 52 week high of 46.90.

Currently listed at 37.00$, down 0.30 on the day. It opened gapped down 0.50$.

What is interesting from this stock is that it has picked up 73% from the lows of the year and has broken out from its ASCENDING TRIANGLE, recently in the last few weeks, as you can see in the chart.

Although there is pressure on the financials this week, there is a possibility to buy on strength in a quick and profitable move.

On the 30 min chart, we see a strong support at 36.50 – 36.25, should the 37.00 figure be broken on the downside (which at this rate, looks quite probable).

Our strategy here is to put a buy order above today’s open price of 37.30, e.g., buy order at 37.35 – 37.40, with a possible run to 38.50 – 38.75. This would give us a profit of 4% on equity in a few days (with no leverage). We’re not looking at a medium term investment here. Once bought and if in a week the stock does not reach these levels, then we’d take profit at market price.

However, should Citi not hit our buy target by tomorrow, we’ll re-evaluate and establish new purchase prices, because it could have started it’s Wave 4 on Elliot Waves, and this mean a minor correction is due. 

Our strategy is to buy on added strength and take a few bucks into our pocket. It could be considered a risky trade; therefore, we buy on strength and take profit very quickly. Should our trade be executed at 37.35 and we want to take less but safer profits, we could put a sell order at the close of the gap at 37.80.

On the other side, if we're not in a hurry, we could wait for a more juicy level, i.e., 36.25 - 36.00 and go long from there. You will definitely get more bang for the buck. 

On March 20th, Citi announced it sold a 2.71 percent stake in Shanghai Pudong Development Bank, raising $668 million, just two days before we are informed that China's manufacturing sector activity shrank in March for a fifth successive month.

The S&P is struggling to hold its 1400 level.

Trade safely. Trade with discipline.

@AmarDaryanani

Banco Santander - a quick in and out?

Good evening everyone.

After a few weeks of focusing exclusively on my trading, I resume my blog with the following update:

Today we see a small opportunity in one of the most powerful banks in the Spanish and European Market: BANCO SANTANDER, S.A. listed in the Spanish Stock Exchange as SAN (SAN.MC is the Yahoo Finance ticker) or STD listed in America in US$.

The following chart shows you the share price of SAN, which has experienced a pull back from today's high of 6.46 (highest value in the last few sessions) all the way to the low of 6.16 on the day. The stock is closing with a minor boost towards the 6.23 area.

As you know, I love Elliot Waves and in the following chart you can see a possible wave count that ends the 4^th wave correction in today’s lows.

Although Mr. Bernanke has declared that the crisis in Europe is not over (thank you for reminding us) the European indexes have had a final jump, although not enough to close the day in green.

At 1700h GMT, we can see that the S&P and Nasdaq are already in positive and the Dow has bounced back from the day’s lows.

If the day continues good for the American equities, we could see a jump in tomorrow morning’s European stock allowing SANTADER to attempt a shot at Wave 5, which would obviously break today’s high of 6.46.

On the other hand, it could just fizzle out and resume the downtrend initiated today. Let’s see the action in tomorrow’s trading session with a possibility to pick up the stock at 6.28 – 6.30 (with a profit target of 0.08 to 0.10 a share). If it doesn’t trigger our buy stop and instead loses steam, then we’ll re-establish our levels and find a more juicy opportunity.  

Trade carefully. Trade with discipline.

@AmarDaryanani

Greece up 20% already!

Good morning.

Today we take a look at the Greek market with a Bull view. As much as this sounds like a joke, it’s not.

In December 2011, Global X launched one of their new ETFs under the name of GLOBAL X FTSE GREECE 20 that replicates the Athens stock market.

This ETF has attracted a lot of attention, especially since it has experienced an increment of 20% this year 2012. This bull rally has come after a long and brutal fall in the Greek equity market and reflects the “buying interest” in the Global Stock Markets.

This does not mean that their debt problems are over. By no means.

One of the negative aspects of this investment tool is that, since it’s quite recent, it has only 3 million US Dollars in assets and a very thing trading volume.

Many investors have various opinions on Greece. You can see some our very cautious and some others are doing bargain hunting. This ETF is very interesting for those who would like to take advantage of an undervalued Green equity market. Since it’s a difficult market to access due to its thing liquidity, GREK makes it easier for the bulls. Let us remember that when this ETF was launched, the Athens stock market had already lost 90% of value from its peak.

The Outlook of the Greek market is not the best and those who are in a buying mood in this market obviously have to assume a great deal of risk

After many downgrades on behalf of the rating agencies, the wrong fiscal information sent to Brussels from Greece, their possible default, the different rescue packages, and many other negative aspects, Greece is not the best place where to put your money.

We believe that GREK is an interesting ETF, more to use as a trading vehicle rather than a long term investment.

 -Amar.

S&P downgrades Europe's Rescue FUND and still we're up!

Good evening!

Another bad rating from S&P downgrading European’s RESCUE FUND has hit the news headlines since yesterday.

As we can see, the market is fully detached from S&P’s communications. As of this evening, Europe is closing with the following percentages:

Germany’s DAX: +1.68%

France’s CAC40: +1.16%

Holland’s AEX: +0.69%

Belgium’s BEL20: +1.00%

Spain’s IBEX: +1.02%

The EURUSD is up for the day listed at current prices of 1.2745.

Asia’s close this morning has also been positive. The US equity market is also picking up with the DOW picking up over 100 points.

After a long weekend and a lot of bad news towards Europe from S&P Rating agency, the European indexes have managed to sustain above water closing most of them in positive.

This is an excellent sign since we believe that this year the stock market will outperform previous years and could establish turn around signals for the rest of the Economy.

Stay tuned for more! 

16.40h GMT

-Amar.