Amsterdam´s AEX could play a key role to assess the European economies´strength

Stocks markets will have to face a difficult week, mainly due to the fact that the uncertainty continues to be the most relevant feature in the short-term scenario. Weakest European markets have spread fears on investors worldwide. As a result, nor stakeholders neither bondholders have been exempt from concerns about their investments yields. So far, gold has been the refuge for frightened people, keen to flee from risky assets. However, even metals seem to have brought about doubts on their rally sustainability.

Previous weeks, attention has focused on Mediterranean countries such as Greece, Portugal and Spain and their capability to meet their financial commitments. Their 10-year bonds incremental yields reveal their overall deterioration, which, especially in the case of the Hellenic country, could finish in default. Despite the endeavours of International Institutions, such as the International Monetary Fund and the European Central Bank, which have repeatedly stated that they strongly backed those European countries that are in trouble, the euro has consistently plunged against the dollar and other currencies. This fact demonstrates that the market shows little or none conviction about the Financial regulators ´speech.

Mediterranean countries have seen their stocks markets plummeting in the last months. The Spain´s Ibex have decreased a 26% since the first week of 2010 and the Greek and Portuguese Indexes have equally undergone severe corrections. By contrast, the Dow Jones and the Germany´s Dax have become the strongholds where money has tried to look for refuge.

Market direction could be a goal complicate to forecast in the short term. Perhaps the behaviour of the Stocks Markets of some Northern European countries could contribute to clarify a short and middle-term strategy. The Amsterdam´s AEX, for instance, has experienced so far a similar movement to the German Index. Nevertheless, last week, prices broke down its 200-session moving average, which has worsened significantly its technical situation, because this index had already a negative element: its primary rising trendline had been lost at the beginning of May.

Therefore, next week the Dutch index will have to prove its ability to be free from Southern European economies ´contagion. There are two key elements which should behave as the crucial tests to determine their future for the coming quarters: the supports of 310 and 300 points. If they eventually are broken, the bearish pressure could lead the AEX to a significant correction. Otherwise, the likelihood to recover its upward structure would remain intact.

There is a single bullish technical element that could suffice to make the AEX experience an increase in the short-term: the positive divergence that the RSI is forming. However, it will have to struggle with too many negative aspects which rule over the market´s sentiment.

The technical recommendation for the AEX is to open short positions if prices break the level of  295 points. It´s advisable to set a stop loss in the level of 335 points.

European Markets: Does History repeat itself?

The technical movement that Stock markets are carrying out is very similar to the recovery cycle that they developed in 2004. At least this conclusion could be made after the analysis of the French Index, Cac 40.

The current chart compares two different moments, 2004 and 2010, which may be considered as analogous from a technical perspective.

In 2004 the market had soared a stunning 57% since March 2003. Subsequently, the Parisian Index got stuck for the whole year in a lateral range, which in the chart appears as a 12%-height rectangle. Prices hit the support of this pattern (the zone of 3.500 points) three times. Finally, it demonstrated that it was strong enough to ensure the continuity of its rising long-term structure.

Currently, the situation is very alike. Despite the collapse of the European Stocks markets in May 2010, the balance remains, as it shows the new rectangle formed by the support of 3.500 and the resistance of 4.000 points. The first level is playing a key role in the short term because it concentrates the purchasing interest. This area has been reached for three times in the last seven months as it happened in 2004.

Despite the general weakness of the Financial Markets, if History repeats itself, the main French Index could withstand the bearish pressure. In that case, the index could deploy the same movement that in 2005 when it eventually broke the top of the rectangle, which brought about a new upward impulse that led the CAC very close to an all-time high.

Consequently, the support of 3.500 points is a key level to watch over, because the likelihood of a similar move to the one that happened in 2004 will depend on its resilience. 

The recommendation is to hold. Stop loss in 3.300 points.

Dollar against euro: The support of 1.25 is ready to try to stop the bearish pressure

The currency of the European Monetary Union has continued to demonstrated its weakness, especially after the bail-out approval that Greece is waiting for. This final decision would be key to prevent the Hellenic country from having to declare a default. However, despite the strong support that the other members of the European Union has revealed and the remarks of the President of the European Central Bank, Jean Claude Trichet, at the moment there is not guarantee that other Mediterranean economies could avoid a financial contagion.

This chart, which shows the evolution of the euro against the American dollar expresses in some way the overall situation we have just described. As we analyzed in our last report, http://timelymarkets.blogspot.com/2010/03/euro-against-dollar-european-currencys.html , there was a serious likelihood that the european currency could reach the level of 1.30. The next sessions involved a brief recovery, after a rebound to the resistance of 1.37. But, the aforementioned events brought about a sharp collapse. Even the strong support of the 1.30 has been unable to offset such a intense bearish movement.

The scenario for the euro remain downwards. The next support, placed in 1.25, should concentrate new bullish interest. Because of that, this area could be a strategic level to open long positions for those investors who are less risk averse.

The recommendation is to buy euros at the zone of 1.25. We´d close this position as long as it hits again the level of 1.30 -1.31. Stop loss in 1.23.

The Nasdaq Composite will have to struggle to keep a crucial support

Last Friday, Wall Street´s main indexes tumbled during the session´s last hour. This fact involves a higher level of technical deterioration.

So Far, North American Stocks Markets have avoided the contagion from other economies, mainly European countries, where a wide range of Indexes have collapsed, especially after the increasing financial problems that Greece has revealed in the last weeks. The credit rating downgrades that some Mediterranean countries such as Portugal and Spain received from Standard &Poor's aggravated their poor technical situation.

The Nasdaq Composite is going to play a key role this week. The technological Index has soared a 100% since March 2010. It currently keeps its primary rising trendline. By contrast, the secondary upward tendency could be threatened if eventually the support of 2.450 points is broken down.

The potential head-and-shoulders pattern that prices are starting to develop is a second negative element. At the moment, its technical situation is not dangerous enough, but if the neck line (wich coincides with the level of 2.450 points) gets lost, this movement could jeopardize its short-term rising structure.

The recommendation is to sell if prices break the level of 2.430 points. Stop loss in 2.535 points.

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.

Dow Jones vs. Oil: Their positive correlation remains.

This chart shows the positive correlation that the oil has kept with the Dow Jones Index for the last two years. Both of them have shared the same falling structure and they are equally developing their respective uptrends.

However, in March 2010 it has emerged a substantial difference between Wall Street´s most representative Index and the dubbed "black gold". As the Dow Jones has been able to overtake the former resistance of 10.750 points, which was reached by the twentieth of January, the commodity has appeared to be too weak to go through its equivalent level. So far, the area of 84 dollars has behaved as a difficult hurdle to be cleared.

The technical situation analysis allows to establish a hypothetical scenario for the coming weeks: if the Dow Jones has been successful in achieving the goal of going through its analogous resistance, maybe the oil could do it as well.

The market is waiting for important economic data. On the one hand, on Wednesday it will be published the ADP National Employment Report, which is a measure of employment from an anonymous sample of about 500,000 U.S. business clients. On the other hand, on Friday, investors will know the non-farm payroll and the unemployment rate in United States.

Both of them could encourage or disappoint the current market sentiment, depending on the final figures. In any case, these data can play a crucial role in terms of knowing the result of the struggle that the oil keeps against the level of 84 dollars.

The technical recommendation is to open long positions if the oil overtakes the area of 84.80 dollars. It´s advisable to set a stop loss in 79.00.

Microsoft: Despite its slow pace, its primary structure remains upwards

Microsoft seems to have moved at a slow pace for the past two months if we compare with other Nasdaq´s securities, such as Cisco or Apple. In fact, its increase during this period (8%) has been considerable lower than these two companies, which have risen a staggering 20% and 22%, respectively. 

Despite this meagre rise, its technical situation remains bullish. As most stocks, its recovery began in March 2009. However, its most relevant moment took place two months later, by the beginning of May, when prices went through the level of 21.00 $. This break-up entailed a new upwards cycle and, consequently, the former downtrend eventually finished.

Therefore, Microsoft keeps its rising structure, which is represented in the chart by a primary tendency, whose slope is moderate (an angle of 18º). It´s remarkable the fact that at the end of 2009 the speed of its recovery increased significantly. This rhythm increase allowed this security to reach the level of 31.50 dollars before it could be expected. 

By contrast, in 2010 the company owned by Bill Gates has experienced two different moments: the first one, which involved a 13% decline, and the current short-term rebound, that is the technical element which a coherent strategy should be built on.

To summarize, investors should  take into account that Microsoft remains in a rising scenario, despite the fact that this year has not already recovered its higher levels. The mission for a short-term investor consists of watching over the first supports, placed on 28.00 and 27.50 dollars.

The technical recommendation is to hold. Stop loss in 27 dollars.

Tutorial on Technical Analysis: Does History repeat itself?

The purpose or our educational project is to make financial knowledge more accessible to students, to spread financial culture among general public and to provide regular traders with help to reduce the inherent risk to Stocks Markets. 

As a result we aim to publish a set of short descriptions on basic concepts related to Technical analysis, which is one of the most interesting disciplines used by investors to deal with their daily key dilemma: Should I buy or sell a security?

Technical analysis is as technique for examining a security´s series of historical prices in order to forecast its future behaviour. 

This method consists of a comparison between both its current and its historical price, so that a likely evolution could be determined in advance.

This field of study is based on a hypothesis: that history repeats itself. Having said that, by analyzing the past we can infer a probable security´s future price. Consequently, Technical Analysis considers that Psychology plays a crucial role in the Stocks Markets and that the final price is the result of many human elements´ interactions. From this perspective, the evaluation of past psychological situations acquires a considerable relevance. If the analyst understands how a mass of investors behaved in the past, it can try to foresee the future in so far as a potential analogous market moment is coming.

To understand our approach, look carefully to the next chart, where we propose two possible similar scenarios on the CAC 40´s French index. Even both situations could be subdivided according to an intermediate or short-term perspective. So far, it´s obvious that it´s too early to appreciate if both chronological moments can really be considered analogous.

In March 2009, a new uptrend appears to emerge. But will the CAC 40´s next market movement soar as it happened from 2004 to 2007?

We invite you to express your viewpoint on this issue by linking the proposed case with the Analysis Technical Principle that “the future can be found on the past”.

This first introductory concept involves an essential pillar to understand the whole content of this website. All questions are very welcome. So feel free to ask us for any clarification.

Apple: Prudence must be the strategy after an all-time high is achieved

The recovery that Apple Computers has experienced in the past year is really impressive.

Its behaviour is exactly the opposite to what had happened in 2008, when the collapse of the Stocks Markets had undergone an accentuation by the last quarter of that year.

Nevertheless, at the beginning of 2009, a tripple-bottom was formed around the area of 82 $, which confirmed a reversed pattern and, therefore, a cycle shift.

From that moment, the second quarter of 2009 began with a staggering increase for the securities of the American multinational corporation. Apple climbed around a 60% since March to May 2009. Nevertheless, its uptrend didn´t finished after this remarkable achievement. In fact, it continued to soar for the next ten months.

During the session of March 25th 2010 the computer manufacturer reached the level of 230.97 dollars, that´s an all-time high, which accounts for a 180% rise from a year ago.

However, this stock is beginning to reflect some exhaustion. The RSI is showing negative divergences, which could involve a significant short-term decrease. Besides, the channel bottom could behave as a strong resistance, which could interrupt such a enormous appreciation.

The technical recommendation is to sell at the current prices. Stop loss in 236 dollars.

Euro against dollar: European currency´s weakness could lead it to the level of 1.30

As we anticipated some sessions ago, http://timelymarkets.blogspot.com/2010/03/euro-against-dollar-goal-is-achieved.html there was a couple of technical reasons to think that it would be very difficult for the European currency to go over the level of 1.38 dollars per euro. This zone concentrated a huge bearish interests. First all, because of the powerful resistance that prices have formed around this area. Secondly, because the main technical element, the falling channel, was too influential in the middle-term scenario. Consequently it coudn´t allow the euro to have a sustainable recovery. Finally, the classic indicator Momentum was completely overbought.

Afterwards, the support of 1.35 break-down has confirmed the euro falling scenario. There is not relevant supports from a short-term perspective until the level of 1.30, which coincides with the channel bottom. This area could again draw new bullish interest, taken into account that technical indicators could be oversold by then.

The technical recommendation is to open long positions on the level of 1.30-1.3050. Stop loss in 1.2860.

e-mini Nasdaq 100: the selling goal is very close

The e-mini Nasdaq 100 has climbed more than a 14% since the past February the first, when it  strengthened its middle-term uptrend, which was born in March 2009. Prices developed a support in the zone of 1.730 points, which has been the beginning of the last rising impulse.

Currently, its technical position involves a call for prudence to those investors who trade in a short-term basis. This opinion is based on two technical obstacles that this index may have to face in the next sessions:

First, the resistance of 1.960 points represents a significant bearish stronghold. This level was the last decent opportunity for many investors to go out from the market in August 2008, just before the Stock Markets collapsed. As for the Nasdaq 100 it plumbed almost a 50% in barely a quarter.

Secondly, the raising channel top is very near. Therefore, the bearish positions should make some kind of additional pressure. Consequently, they could interrupt the current middle and short-term upwards movement.

The technical recommendation is to open bearish positions around the level of 1.950-1.970 points. It´s advisable to set a stop loss around the level of 2.020 points.

E-mini S&P 500 future contract: Rising structure remains

The e-mini S&P 500 future contract has kept an impeccable short-term rising tendency. The decline between January the fifteenth and February the tenth increased the likelihood to extend its eleven-month primary upwards movement, due to the fact that it was able to diminish its excessive overbought situation that most of technical indicators showed. Therefore, the correction from the level of 1.150 to 1.050 has played a key role, because it has boosted this new rising impulse.

To sum up, this index remains bullish from a middle and short-term perspective. Prices in the first scenario are guided by the parallel lines, which are the current limits to its movement. As for the short-run strategy, it should be planned taken into account that the rising trend, born five weeks ago, remains intact.

So far, the e-mini S&P 500 maintains its successive higher-low prices. The last supports shall be watched over, so that investors remain confident that the rising structure continue going ahead. This important zones are the level of 1.150 and 1.130 points.

The recommendation for this index is to keep long positions. Stop loss in 1.125 points.

The Bund rebuilds its middle-term rising structure

In the last analysis we explained the high hurdle the Bund had to deal with. There were three reasons to suspect that the German bond would have considerable difficulties to continue going up:

1. First of all, because of the rising channel top closeness, that suggested that the previous rebound (which began in February the 18th around the 122.50 zone) was about to be exhausted.
2. Secondly, because of the presence of the 124.80 resistance, which could exert such a bearish pressure on prices that it could eventually jeopardise that February shy recovery.
3. Finally, some short-term leading indicators, such as the Williams and the Stochastic were extremely overbought.

The overall circumstances led to forecast a moderate decline within this channel framework.

Prices tried stubbornly to go through the resistance of 124.80 for seven sessions. However, the goal was eventually postponed and a correction was brought about.

The subsequent fall has allowed the Bund to gather more bullish allies. As a result, it´s currently rebuilding its rising structure. As the middle-term scenario continues being led by increasing low-prices, the recent fall could have led the German bond to find out a new support in the area of 122.00. From this level, a new rising impulse could start. The next goal would be the next relevant resistance: 125.00.

The recommendation is to open long positions. Stop loss en 121.80.

Cisco: Bullish positions overpower a difficult resistance

Cisco´s movement confirms the significant improvement of Nasdaq´s main components. The supplier of networking equipment for Internet has been able to go through the difficult area of 24,80 dollars. It achieved this goal during the session of March the eighth, when the resistance was clearly overtaken. This movement strength assessment implies to evaluate a key data: the volume which came along the rise. The chart points out that this statistical data was specially high, compared to the 30-day moving average. Consequently, we can infer from this technical indicator, that the shift towards a more bullish scenario was validated for a mass of investors.


Anyway, we must not forget that the short-term way doesn´t lack obstacles. The next goal is the resistance of 27,80 dollars, which approximately coincides with the rising channel top.


The recommendation from a short-term perspective, is to maintain buying positions. Stop loss in 25,50 dollars.

DAX: It achieves the goal of its inverse head-and-shoulders pattern

In the video tutorial we published at the beginning of March,http://timelymarkets.blogspot.com/search/label/Video%20Tutorial we explained that the main German Index could develop an inverse head-and-shoulders pattern which should lead the Dax to the highest level that was reached on January the eleventh: 6.100 points. The rise measurement was done according to the basic principles of Technical Analysis: once the neckline is broken up, the upwards movement should coincide with the head height. The rising tendency which was born in March doesn´t seem to have finished. However, the presence of a resistance in that level of 6.100 points should be considered as a call for prudence.

The recommendation is to sell partially around the area of 6.050 - 6.100 points and to close totally long positions if it achieves the next goal, between the zone of 6.250 and 6.300 points.

Oil: Prices point out to the raising channel top

The oil upwards movement for the past three weeks has been coherent with its raising channel. As we analyzed in the two previous analysis, the prices could experience a rebound from this channel bottom. Our first goal was the level of 82 - 83 dollars, where there was a resistance which coincides with the top levels that this commodity reached by the beginning of 2010.

This objective has been achieved. From now onwards, the question is if it will be able to overtake this level to initiate a new impulse to 85-86 dollars. The reply to this dilemma involves an assessment of the short-term tendency, which began by February the fifth. So far, the yesterday correction has not damaged it.
Therefore, it remains a raising potential. Due to the fact that prices develop their movement in a recovery scenario, the new projection can lead the oil to the level of 86 dollars.

Our technical recommendation is to sell partially on the level of 82-83 dollars and to close definitely long positions as soon as oil reaches the goal of 85-86 dollars/barrel.

ebay: The resistances break involves a technical situation enhancement

Ebay has showed a perfect equilibrium for the past seven months, which has led it to design a perfect rectangular shape, a very tipical pattern that happens when there is a balance between bullish and bearish expectancies. Nevertheless, in March, the bullish strengths have overpowered in the short term scenario. Consequently, the new technical situation seems to be more appropriate for long positions. In any case, the rise has been extremely vertical. Because of that, some correction could appear in the next sessions.

The recommendation is to take advantage of a potential decline to buy stocks of "Ebay". Stop loss on the level of 23 dollars.

Euro against dollar: the goal is achieved

As we pointed out in our last analysis, http://timelymarkets.blogspot.com/2010/02/el-euro-no-da-senales-tecnicas-de.html ,the euro had no many chances to experience a sustainable recovery against the North American currency. A potential rebound could essentially be brought about by the positive divergences that the indicador RSI was showed by comparison with the prices. However, the dominant element within the short term scenario was the incipient downward trend which began to develop itself by the beginning of December 2009.

So far, its key role remains unchanged. Because of that, this falling tendency has been able to interrupt this apparently short-lived rise of the European currency.
In addition, the overbought situation of Momentum provides more evidence that the euro could be pushed down by the falling scenario.
Consequently, for the time being, there is not reason to abandon bearish positions. Therefore, our recommendation is to close long positions. We establish a stop loss in 1,3900 dollars/euro.

Nokia, is the lateral movement over?

The Finnish Telecom company underwent a staggering fall in the Stock Markets, from the level of 28 euros at the last quarter of 2007 to 7 euros by the beginning of March 2009. Since then, Nokia has kept a lateral movement between the support of 8.40 euros and two resistances, which are placed approximately on the level of 11 and 12 euros. This technical situation has led to a balance between bearish and bullish positions which involves an ideal scenario to make an aggressive trade for short-term investors. Currently, the horizontal situation remains unchanged. Therefore, the sooner the prices approach this resistances, long strategies should be closed. Volume continues being very low. Consequently, there are not technical reasons to open a long strategy in the short run.

If prices overtake the resistance of 12 euros, the situation would be completely different. In that case, bullish strengths would take over the battlefield and it would be the chance to initiate a long strategy.

Dow Jones: Long Term Perspective

The North American Indexes have been more resilient to the news which have had a negative effect in the developed countries' Stocks Markets. As we have analyzed in previous strategies, many European indexes have lost their primary rising trendlines. They are currently trying to structure their move in order to be able to recover former upwards moves.

By contrast, the Dow Jones has been strong enough to keep its move up, after a brief period of consolidation. The most well-known Stocks index could offset the bearish pressure, thanks to the 9.850-point support´s strength.

Consequently, the long-term structure remains upwards. The recommendation is to maintain a long strategy. Stop loss in 9.700 points should be established.

Nikkei: A long term perspective

The long term analysis of the most representative Japanese index brings an ample range of information on its technical situation. In fact, it shows the most common moves that prices can be developed and consequently, analyzed by means of Statistics.

The Nikkei carried out a lateral move for 20 months, since January 2004 to August 2005. The range wasn´t too wide, but the purchasing and the bear positions were well established, which facilitated a speculative strategy between 10.500 and 12.000 points. This scenario involves a trader´s more demanding attitude in order to make a profit.

The 12000-point breakout lead this index to the highest of 18.000 points. This scenario´s main feature is its rising trendline. The only coherent strategy is to maintain long positions. Therefore, trader´s only mission is to watch over a possible trendline break-down.

From July 2007 to the lowest level of March 2009 the Nikkei developed a clear downwards trend. Logically, the only possible strategy was a short position as a general rule. Nevertheless, we can realize that prices built a channel where rising movements were sometimes brought about. For example since March 2008 to July 2008, the Japanese index soared dramatically from 11.700 to 14.700 points, which means a 25% increase.

Finally, the question is if a new rising cycle has began in March 2009. So far, this is the most evident hypothesis, as succesive higher-lows appear. The last two supports have been 9.000 and 10.000 points. So the rising trendline must be watched over.

The long term recommendation, from a technical viewpoint, is to maintain long positions with a stop loss in 8.900 points.

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Japanese Yen against US dollar: It remains the North American currency weakness

This chart shows the evolution of the Yen/US dollar for the past five years. We can realize that there is two clear stages: The first one, which starts by the beginning of 2005, leads the prices to the level of 125 yens per $. In August 2007 the rising trend is broken down. This moment implied a cycle shift, as the vertical yellow line points out. This feeling change had significant consequences from a technical point of view, because there was not other choice apart from opening short positions.
From that moment onwards, US dollar has tried to consolidate a reliable support which allows a new upwards cycle. So far, the level of 85.00-87.00 has behaved as a prospective candidate, but it´s too early to consider if it eventually will play this supportive role for a bullish strategy. We consider that it´s much more relevant to watch over a possible resistance of 94.00 break-up, which definitely would imply the downtrend end.

Our Technical recommendation is to open a long strategy just if prices break out the level of 94.50. The next goal would be the area of 101.50. Be aware that you should set a stop loss in this case in 91.30. Meanwhile, it appears to be more coherent to maintain a short position.

Eurostoxx 50. Difficulties to develop a reversal pattern

The Eurostoxx 50 had appeared to be very weak during 2010, especially after the rising trendline breakout in January 15th. Since that moment, the most coherent strategy has been the bearish one. However, prices seem to have found out a reliable support in the short term: the level of 2.670 points. A reversal pattern of shoulder-head-shoulder is beginning to appear. The key points to ensure a successful long strategy is, on the one hand, to go through the neckline, and on the other hand, to do it with the technical indicators in a neutral position. Some fast indicators such as Williams and Stochastics are overbought. Therefore, it should be necessary to have a rest before trying more ambitious goals.

Technical recommendation is to take advantage of possible corrections to the level of 2.750 points, to add long positions. Stop loss in 2.650 points.

Hang Seng. Stochastic´s overbought conditions could lead to a decline in the short term

The technical situation of Hong Kong´s main index has significantly improved in the last week, especially after the 20.500 - point level break-up. However, there are some obstacles in the short term which could prevent it from continuing its upwards movement. Fist of all, the level of 21.000 points, that was a strong support in the last quarter of 2009, should become this time a difficult resistance to be pierced for the purchasing interests. Secondly, some indicators, such as the Stochastic, which are overbought, suggest that prices could have risen too fast and too steeply in the short term. Therefore, the market sentiment could turn a little bearish. In this case, the index could look for to lean in the short-term upwards trend, around the level of 20.400- 20.500 points. The recommendation is to add long positions in case of decline and to set a stop loss in 20.100.

Dax: To be attentive is a must. A pattern of shoulder-head-shoulder might be carried out

The main German index was up about 69% since March 2009 to December 2009. During this period it was able to keep an upwards tendency. As soon as prices touched that trend, quick upwards movements were brought about. This scenario indeed facilitated the proper strategy: according to Technical Analysis basic principles, a trader must be coherent with a trend direction. Therefore, long positions should have been kept for the last three quarters of 2009. However, by the beginning of the second fortnight of January 2010, the situation changed dramatically. That tendency, which had played a key role, was broken and therefore, it didn't make sense to maintain the same strategy.
It was difficult to evaluate the consequences of such a tendency break, especially because the volume was significantly higher than the monthly average. From that moment, perhaps the indicator which has taken the lead in the new scenario has been the 200-session moving average. This indicator has allowed the Dax to build the foundations of its recovery. In the short term, it´s developing an inverse shoulder-head-shoulder. The most important element is the neckline that the level of 5.735 represents. If prices pierce it with an important volume increase, the next goal would be the high levels of 2010, that´s 6.100, which implies a recovery of 6.30%.
From a Technical point of view, we recommend to open long position above 5.750 and a stop loss on 5.480.

BBVA puede empezar a recuperarse de las fuertes caídas de este año

BBVA acumula unas caídas de un 30% desde que en enero alcanzase los 13,30 euros. Aunque aún no se observa una figura de cambio de tendencia, el RSI comienza a mostrar divergencias alcistas que pudieran llevar al valor a vivir un período de recuperación si éstas llegasen a desarrollarse. La recomendación es de compra para trading con stop loss en 9,00 euros.

El Eurostoxx 50 se estabiliza en un rango lateral entre 2.600 y 2.800

La media móvil de 200 sesiones ha jugado un papel decisivo en la interrupción de la corrección bajista de este año. En el corto plazo su movimiento se ha estabilizado entre los 2.600 y los 2.800 puntos, que pasan a convertirse en las dos zonas de referencia de este índice. La posibilidad de volver a dirigirse a los máximos de principios de 2010 pasa por la superación de la resistencia de los 2.800. Por el contrario, la perforación de los 2.600 añadiría potencial bajista a su situación técnica. La recomendación es mantener posiciones largas con stop loss en 2.550.

El Bund, prudencia ante la verticalidad de su reacción alcista.

El Bund alemán, después de no haber desarrollado una estructura chartista de caída similar a una cabeza y hombros, ha tenido una precipitada reacción alcista hasta el límite superior de dicho canal. La excesiva verticalidad de la subida, unido a la presencia de una resistencia en los 124.50, aconsejan actuar con prudencia en los niveles de precios actuales. Se recomienda entrar en posiciones cortas con stop loss en 125.50

Análisis de la correlación positiva entre el dólar/euro y el Dax de Alemania

Si analizamos de manera conjunta por una parte, la evolución de la cotización del euro frente a la divisa norteamericana, y por otra, el comportamiento del Dax de Frankfurt, llegamos a la conclusión de que su correlación es positiva con una Beta cercana a 1, a excepción de algunas sesiones a finales de diciembre de 2009. Durante 2010 el desplome de la moneda única europea se ha vistado acompañada de un descenso muy significativo del indicador germano. La cuestión ahora sería si una recuperación del euro podría implicar consecuencias alcistas para el Dax. A tenor de lo sucedido en el pasado, existen indicios para pensar que así podría ser. Es necesario, en consecuencia, calibrar esas posibilidades de rebote al alza de aquél. En principio, el único argumento a favor de un rebote es la divergencia alcista del RSI, que podría apuntar a una ralentización de su ritmo de caída. A pesar de tratarse del único punto a favor, no es un argumento despreciable. La consecuencia podría ser una reacción al alza hasta niveles próximos a los 1,40 dólares por euro. Ello abriría la posibilidad de una reacción alcista al Dax hasta los máximos de principios de 2010. La primera prueba de fuego sería para el índice alemán la resistencia de los 5.750. La superación de este nivel favorecería la hipótesis apuntada anteriormente. En caso contrario, seguiría el escenario de debilidad técnica.

Nikkei: La resistencia de 10.450 puntos puede poner freno a las subidas

El índice japonés Nikkei consiguió llevar a cabo un rebote alcista desde la media móvil de 200 sesiones http://timelymarkets.blogspot.com/2010/02/el-nikkei-puede-rebotar-tras-haberse.html. Esa recuperación de aproximadamente un 5% puede ser objeto de una consolidación, al haber alcanzado el primer objetivo de los 10.450 puntos. No sería extraño que pudiera corregir en el corto plazo hasta niveles de 10.100 puntos, lo cual dejaría intacta esa directriz alcista de fondo.
La recomendación técnica es mantener con stop loss en 9.900 puntos.

Debemos vigilar la reciente estructura alcista del Dow Jones

La nueva tendencia alcista recién inaugurada por el índice norteamericano http://timelymarkets.blogspot.com/2010/02/la-ruptura-de-la-resistencia-de-10350.html no ha quedado dañada, a pesar de la corrección de la sesión del 23 de febrero. De momento, la sobrecompra ha empezado a provocar la caída del índice y permanece el potencial correctivo. El Dow Jones podría dirigirse a niveles cercanos a los 10.000 puntos, pero, a fecha de hoy, la conclusión más positiva es la permanencia de la directriz alcista. La recomendación es mantener con stop loss en 9.980 puntos.

El barril de petróleo se aproxima a su objetivo de subida

El barril de petróleo que ya había dado muestras de un potencial de revalorización desde la base de su canal alcista, http://timelymarkets.blogspot.com/2010/02/el-barril-de-petroleo-brent-rebota.html está aproximándose a su objetivo de subida. Aún no ha alcanzado la parte superior de dicho canal, pero el bajo volumen de las últimas sesiones y la sobrecompra de algunos indicadores técnicos como el estocástico, pueden empezar a ralentizar el ritmo de la subida. El RSI, sin embargo, aún puede conservar cierto recorrido. La recomendación es aprovechar subidas hasta los 81-82 dólares para vender.

El nivel psicológico de los 5.000 puntos del Footsie 100 impulsa una reacción alcista

La importante recuperación del principal índice londinense ha conseguido una mejora significativa en su situación técnica. El origen de la misma ha estado en la solidez defensiva demostrada por el nivel psicológico de los 5.000 puntos. Esa reacción alcista posterior ha conseguido poner fin a la directriz bajista que había dominado este índice durante gran parte de 2010. La verticalidad de la subida, sin embargo, ha dejado algún indicador técnico como el Stochastic demasiado sobrecomprado. En consecuencia no es descartable una cierta consolidación de las subidas durante esta semana con el objeto de disminuir esa sobrecompra acumulada.
La recomendación es aprovechar caídas para aumentar posiciones compradoras con un stop loss en 5.100 puntos.

La ruptura de la resistencia de 10.350 puntos denota la fortaleza técnica del Dow Jones

Las divergencias positivas del indicador RSI han impulsado la recuperación del índice más popular de Wall Street. La ruptura de la resistencia de 10.350 puntos hace que el próximo objetivo sean los máximos de principios de 2010, en torno a los 10.750 puntos. No es descartable que la sobrecompra de otros indicadores técnicos puedan motivar alguna corrección puntual, pero en cualquier caso,se recomienda aprovechar dichas tomas de beneficios para abrir posiciones largas en el índice norteamericano.

Siemens realiza un desplazamiento lateral entre los 60 y los 68 euros

Uno de los miembros del DJ Eurostoxx 50, Siemens, presenta un comportamiento de lateralidad. La recomendación es aprovechar esta situación, entrando en posiciones largas en las cercanías de los 60 euros y vender a medida que el valor se aproxime a la resistencia de los 68 euros.

El Ibex comienza a reaccionar al alza tras el período correctivo desde los máximos de 12.000

El índice selectivo del mercado español ha dado muestras de una profunda debilidad a lo largo de 2010, liderando el porcentaje de caídas entre los mercados de valores europeos. Ayer superó una decisiva resistencia en la zona de 10.550 puntos. El principal inconveniente sigue siendo el escaso volumen de negociación que acompaña a las subidas.

La recomendación técnica es abrir posiciones largas si supera los 10.600 puntos estableciendo como primer objetivo los 11.300 y un stop loss en 10.250