Overseas markets ended the previous week on a high with both the Dow Jones Index and the S&P500 index closing at all time highs on Friday. This was achieved on the back of the surprise announcement from the Bank of Japan to increase its stimulus program which includes an increase in its purchasing of Japanese Government Bonds and exchange traded funds.
The other stimulus to the US markets has been the better than expected third quarter earnings report. So far 70% of stocks have reported their 3rd quarter earnings and more than three-quarters of these companies have reported above analysts estimates.
The major indexes have now rallied from the September and October correction and have pushed to all time closing highs. I for one was expecting the resistance levels to hold in the short-term but bullish momentum has easily pushed beyond these technical levels.
The chart for the All Ords Index does not provide as bullish a picture as that of it’s US counterparts. Clearly further bullish movement on the US markets will continue to push the Australian markets higher but the All Ords Index is likely to meet resistance at 5670 points as shown on the chart below and it would not surprise to see a reversal at this price level.
One stock from the Australian market to look out for is that of NEXTDC (NXT) as charted below.
The stock was in a strong downtrend over the past 12 months with a breakout from the downtrend in late October with the subsequent appearance of a higher high and higher low to signal the start of an early up trend. The 20 and 50 day moving averages have also formed a bullish cross. I will have this on my watch list and will look to any retracement as being a potential to enter on the long side.
Welcome to my first blog for several months. I took a few months off from trading to work on my trading plan and to focus on fine tuning my exit strategy. It ended up occurring at an opportune time with the markets dropping heavily in the months of September and October when I was not invested in any trades. As a trader I think it’s good to have a break from trading and to sit back and see how the market behaves without the emotion involved in holding trades.
Looking at the Dow Jones Index and the S&P500 index below it can be see that the markets were heavily sold off in late September and into October. The markets have since rallied from mid October and are closing in on the first resistance levels as depicted in the charts below. After such a strong rally prices may start to blow off and sellers may be tempted back into shorting positions with buyers also off loading long positions.
At this stage I am going to be sitting on the side-lines until either the first resistance level is overcome with the more likely scenario being that I will not enter the markets again until all time resistance in both the Dow Jones and the S&P500 is cleared.
I look forward to providing more regular blog articles in the coming weeks.
The Goldman Sachs Group, Inc. is global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals.
The chart below shows it’s share price over the past seven months. The downtrend was broken in mid June with prices consolidating above the 200 day moving average. Over the past fortnight the price has retraced to form a bullish wedge. Yesterday saw a bullish candle breakout from the wedge pattern. This is my signal to enter a long position trade.
On this setup I will look to go long at a price of $168.00 with a stop-loss under the wedge low of $166.00. My initial target will be the resistance high from March of $175.00.
Shares in Apple have enjoyed a rise in prices for the past few months. The rise in prices has formed an up-trend with a recent retracement forming a trend channel.
The share price had a bullish breakout from the channel on Friday. This provides my trigger to enter a long position. I will look to enter somewhere in the region of the real body candle from Friday (approx $91.00). My stop will be placed under the most recent pivot lows in the region of $89.50.
Tesla Motors, Inc. designs, develops, manufactures and sells fully electric vehicles and advanced electric vehicle powertrain components. It provides services for the development of electric powertrain components and engages in the sale of electric powertrain components to other automotive manufacturers.
The share price for Tesla increased 8.81% on Monday on the back of positive news from the company that it’s long anticipated electric car Model X SUV will be delivered in early 2015.
The share price managed to breakout from its recent trading range and through recent resistance on higher than normal volume. I expect the bulls to come in and push prices higher with targets close to the March highs of $260-$265.
Shares in the social media giant Facebook (FB) increased 4.6% at the close of trading on Tuesday. This increase was on the back of the announcement a PayPal head will join the company to head it’s messaging products division.
The share price below shows the recent price action with a strong breakout from recent congestion. The breakout occurred on relative strong volume which adds to the bulls conviction to rise the share price.
Traders can look at entering a long position with a target price close to the March high of $72.00. Stops can be placed under the most recent congestion low of $62.00.
The US markets enjoyed a bullish day on Wednesday with gains made in all the major indexes. The S&P500 gained over 1% and manged to bounce off the 1,840 support level I mentioned in yesterday’s blog. The S&P500 is currently trading in a range bound by support of 1,840 and resistance of 1,895.
Coca-Cola Company (KO)
The chart for Coca-Cola shows an ascending triangle with horizontal resistance at $39.00. For this set-up I will be watching for a breakout closing price above $39.00 to trigger my buy signal. If this occurs then I will be targeting a price of $41.00.
Eli Lilly and Co (LLY)
Eli-Lilly has been trading within a rectangular range bound by support at $57.00 and resistance of $60.00. Yesterday saw a breakout closing price above the $60.00 resistance level. I will look for confirmation of the breakout today with a second day close above $60.00.
The technical’s for the Dow Jones Index show signs of reaching support levels and perhaps falling slightly further before it’s able to resume it’s up-trend.The Index has retraced after touching it’s resistance level of 16,600 and I expect it to keep falling towards the support level of 16,050.
In comparison to the Dow Jones Index above the S&P500 index has already reached it’s short term support level of 1,840. Prices should hold here in the short term before the index is able to resume it’s up-trend. A break below this support region could see prices drop further all the way towards 1,815 points.
Senior Housing Properties Trust
The chart shows the formation of a bullish reversal inverse head and shoulders pattern. The price was able to break through the $23.00 neckline resistance two days ago.
It’s been a quiet week for me on the trading front mainly due to missed opportunities on the Australian market with limit orders not being hit. As trading is not my full-time job this makes it difficult to see new opportunities as they arise during the market hours as I am busy working in my full-time job. This is one of the disadvantages of a part-time trader with a day job as many of you may be, however, I am hoping to be able to enter a trade on the US markets when they open in a few hours from now. To finish off the week I will write about a long and a short position trade setup.
LPL Investment Holdings (LPLA)
LPLA formed a strong up-trend from October to January when it hit a high of $54.91. It then began to move sideways and formed an ascending triangle which is a sign of consolidation and ordered profit taking. Yesterday saw a breakout from resistance with a strong bullish candle. I’d like to see the resistance price re-tested and to hold above this level before entering.
Amazon.Com (AMZN) has formed a bearish wedge after a very bearish breakdown through support on January 31st. I have highlighted the re-test of the support level which acted as resistance and halted further price increases. You can see how the candle tried to break through the resistance level but closed lower forming a long-tailed candlestick.
Yesterday saw a breakout from the lower trend-line making up the wedge pattern. I suspect the price will resume it’s downtrend from here and may fall all the way back towards the support level of $340. Any price increase should be held up by the resistance level of $380.