Dow and Dax shine among Securities markets, but they reach their goals

The Dow Jones and the Dax have demonstrated so far their resilience among the most representative worldwide Stocks Markets. As their charts show, they have been able to maintain their upward tendencies during the past two months, despite the general weakness which many Securities Indexes have been immersed in.

Nevertheless, their technical situation has begun to deteriorate, which can led both of them to look for lower goals. However, the strategy remains unchanged as it should focus to watch over the first supports: 10.960 and 6.140 points respectively.

The recommendation for the German Index is to sell if prices finally break the support of 6.140 points. Stop loss in the level of 6.350 points.

As for the Dow Jones the recommendation is to sell if prices break the level of 10.940 points. Stop loss in 11.250 points.

Dow Jones and Dax: Markets correction consequences

Last Friday alleged fraud accusations against Goldman Sachs brought about a significant correction in the Stock Markets, whose technical consequences have differed if we compare both North American and European main securities Indexes.

For instance, the most representative German Index, the Dax, has experienced a short-term scenario change towards a more bearish situation. In fact, its accelerating line is beginning to undergo a bearish pressure increase. As a result, its rising structure can be seriously damaged. The significant decrease that European Stocks suffered last week was, on the one hand, the result from a evident overbought situation that technical indicators had begun to show and, on the other, an excuse that investors had been looking for during the last sessions to make a profit-taking movement.

So far, it´s unclear which the extend of the correction could be. It will depend on the 6.140 support resilience. If it eventually can´t withstand the selling pressure, the accelerating trend will be considered as definitely lost. In that case, the decrease goal would be its primary rising trend, which passes by the level of 5.900 - 5.750 points. By contrast, if it concentrates enough buying interest, its short-term rising structure could be re-built again.

The recommendation is to close the long strategy if prices finally break the support of 6.140 points. Stop loss in 6.300 points.

The Dow Jones has demonstrated so far a healthier situation that European indexes. In fact, the 14% decline that the aforementioned banking investment firm underwent on Friday didn´t interrupt the rising movement that the most popular North American Index has been carried out since the beginning of February.

However, the fall was so abrupt, that a more intense falling technical movement could be unleashed in the coming sessions. To assess the likelihood of such a significant fall is very important to watch over the level of 10.950 points (whose role is absolutely key)  and secondly, the support of 10.850 points (by far less significant, although it should theoretically be more resilient).

The recommendation is to open short positions if prices break the level of 10.800 points. Stop loss in 11.150 points.

Coca-Cola: The 56-dollar resistance break-up would confirm a rising scenario

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The world´s largest beverage company seems to stay on a very quiet, even lethargic, movement. Its outlook appears to be weaker if we compare it with the Dow Jones´ behaviour, which this stock belong to, because, as the most popular Index of the New York Stock Exchange has been able to overtake its 2010 high level, which was touched by the 20th of January, Coca-Cola has remained very far from its analogous zone.

The main reason for this seemingly lack of dynamism should be found out on the robustness of the 56-dollar resistance, which has concentrated too much selling interest. This level has eventually become an impregnable fortress for the bullish side. Therefore, it will need a consistent effort to be hit.

However, despite the short-run scenario difficulties, this security remains upwards from a long-term perspective. The key technical element continues to be its 200-session moving average, which is a very reliable statistical element for the current analysis. In fact, since this lagging indicator was overtaken by the prices by the end of May 2009, the most logical strategy has been to keep long positions. Even the first quarter of 2010 correction was unable to invalidate the hypothesis that a new upward cycle had begun.

To sum up, Coca-Cola shows a favourable outlook for a long position strategy, despite its short-term sideways situation.

The recommendation is to hold. Stop loss if it breaks the level of 52.40 dollars. 

Google can be willing to make an upward impulse

Google has spent most of the past two months in a sideways movement. This short-term range - bound technical situation doesn't imply that the Internet search technologies company is apparently showing weakness symptoms. In fact, we must take into account that Google has risen about 129% since November 2008.

Having said that, its current lateral move seems to be a reply to its previous spectacular recovery. Because of that, its quiet technical situation could be a strategy to consolidate its substantial prices increase. Thus, its short-term intention would be to try to make a new upward impulse to reach higher levels.

Therefore, Google's scenario remains positive. There are at least two kind of elements which support this hypothesis:

First, the resilience and continuity of its rising tendency. Despite the prices correction between the beginning of January and the 25th of February 2010, when the Internet-based services and products corporation fell from the area of 629.50 dollars to the level of 520 dollars, the main uptrend has always remained intact.

Secondly, the supports of 520 and 550 dollars should supposedly play a crucial role in the coming weeks. If they have been able to prevent further falls, they could continue drawing new buyers around these levels. 

Consequently, this group of technical parametres could eventually bring about a new upward impulse, as long as the bearish positions become exhausted. 

The first obstacle is the resistance of 590 dollars. If finally this level is overtaken, the next goal would be the maximum price reached in 2010, that is 629.50 dollars.

The technical recomendation for Google is to buy. Stop loss in 519 dollars.

Allianz: As many German securities, its technical situation has improved significantly

Allianz has been one of the Eurostoxx 50 index´s components whose performance has been more outstanding int the past eight weeks. Since February the eigth, the Financial services provider has soared a 22%.

Despite the vertical increase, its technical situation hasn´t experienced any deterioration at all. So far, it has formed two consecutives higher-lows. The first one around the level of 81 euros and the next over the area of 87 euros. This investors' willingness to pay higher prices points out that the German company´s scenario is gradually improving. Currently, the prices are trying to accumulate bullish interest near the zone of 92 - 92.50 euros. As a result, this area could become a new support which would confirm its short-term upward trend.

Apart from these successive supports, there is a second crucial element: its rising channel, which has been so far an excellent framework to indicate the prices the way to follow. In other words, this channel has driven perfectly the share prices towards a substantial recovery, which has been consolidated after the resistance of 90.00 euros break-up.

The correction that Allianz has experienced this week has been very useful to diminish the overbought situations of several technical indicators, such as Williams and Stochastic. Consequently, the prices could keep upward potential yet.

The recommendation is to watch over the level of 92 euros. As long as it remains intact, a short-term investor should keep Allianz within his/her portfolio. It's advisable to set a stop loss in the area of 91.50 euros.

Citigroup has developed successive falling and rising trendlines

Citigroup´s debacle has been one of the most representative amongst the Financial securities, which in 2008 underwent a severe correction. The International Financial conglomerate that competes in corporate, consumer and investment banking, reached at the end of 2006 the level of 57 dollars in the Stock markets. However, by the beginning of March 2009, its shares price was just one dollar.

Since then, it has experienced a significant recovery (about a 332%) mainly as a result of the North American Government's $700 billion bank bailout. Nevertheless, its increase has not been homogeneous at all. In fact, if we look at its one-year chart, we realize that there have been successive upward and downward movements. Despite this apparently unclear technical situation, Citigroup has formed three consecutive supports (1.00, 2.20 and 3.10 dollars) which reveals a gradual technical enhancement.

The most relevant feature of the short-term scenario is its upward trendline which began in the support of 3.10 dollars. As long as it remains intact, coherence demands long positions, despite the fact that prices can face some correction in the coming sessions.

The recommendation is to buy. Stop loss in 3.80 dollars.

Nokia: Be attentive to the level of 12 euros. A potential rising cycle could be coming

As we´ve seen in previous analysis, most Stocks Markets have initiated a remarkable recovery since March 2009. As a result, many securities have experienced significant increases whose amount depends on the industry, the geographical area and many other different variables related to Microeconomics and Macroeconomics. 

Despite this general improvement, the mobile phone supplier has remained in a lateral situation, whose technical movement has swang between the support of 8 euros and the resistance of 11.50 - 12.00 euros. If we focus on the current chart, once the falling channel was broken up, Nokia´s technical situation can be characterized by a lasting steadiness for the whole 2009. In fact, its recovery beginning can´t be properly considered until February 2010, when bullish positions started to demonstrate that could overpower bearing interests.

The Finnish company is going to face a key level during the coming sessions. The resistance of 12 euros will decide if this security can eventually develop a new rising cycle. Some leading indicators are too overbought, which could prevent the telecom enterprise from continuing going up. Anyway, its technical outlook has improved considerably.

The recommendation is to open long positions if it overtakes the level of 12.20 euros or it undergoes a correction to the zone of 11.30-11.40 euros. Stop loss in 10.95 euros.

Spain: Its main Stock market Index, Ibex 35, reflects a troublesome economy

The Spanish Stock Market has had one of the poorest performances amongst the European countries in 2010. So far, the Ibex 35, its most representative Index, has decreased about a 7%, as the German DAX or the French CAC 40 have increased a 5% and a 3% respectively. Its behaviour seems to be more sluggish if we compare with another European indexes, especially Nordic Economies, such as Finland, whose Index HEX has soared around a 13% during the first quarter of this year.

The collapse of some of the most significant “blue chips”, such as “Santander” or “BBVA”, that plumbed 37% and 30% between January the eleventh and February the twenty sixth, has partially explained the weak situation of the Spanish market. Apart from these multinational banks, Telefonica had fallen a 19% in the same period. We have take into account that this three securities account for a 50% of the Ibex 35.

Despite this apparently discouraging situation, a fair analysis should take into consideration the fact that these stocks had a staggering recovery last year. Santander, for instance, soared a 235% in the last three quarters of 2009. Therefore, its correction of 37% should not be dubbed as “worrying” from a long-term perspective.

Once the one-year scenario has been dissected, the main question is what investor can expect for the coming months. If we examine in detail its technical situation, there are relevant elements to look at. The key level of 11.200 points is going to play a crucial role in the short term. So far, it has prevented the Ibex from carrying out an upwards movement, like the European ones we have previously mentioned. If this area was broken up, the Ibex would still keep a potential recovery.

This chart shows a second important factor that can influence the result: the psychological zone of 10.000 points behaved as a bottom two times. The subsequent break-up of the 10.750-point level could have made an impartial spectator think that the Spanish market is trying to develop a double-bottom pattern and that the falling stage could be close to an end.

However, despite this appealing hypothesis for bullish strategies, the resistance of 11.200 points, which was a phenomenal five-month support, remains decisive. If finally it´s broken up, the way to the next resistance (12.250 points) will have been cleared. Otherwise, the Ibex will stay in a range-bound situation between 10.750 and 11.200 points.

The recommendation is to hold. Stop loss in 10.680 points.