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

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.