Of late, the FTSE (London Times Stock Exchange) has been struggling to make new highs. When looking to the left on the daily chart, we see that lower highs and lower lows (even though minimal) are beginning to accumulate. In addition, this level appears to bring out plenty of supply (sellers). The overall trend is up, but tightening within an ascending triangle. This price action makes us sit up and take notice. A substantial move could be in the works within the next three months. The FTSE has struggled since early 2013 to clear the 2008 highs. We’d like to see this index break upward (or at minimum, hold this level) to confirm all other current global equity bull markets. If FTSE breaks down, it will cause us to watch all other global equity markets (most notably, the US) with more scrutiny. Keep calm, curious investor.
One of my favorite trades of the year has been bonds. Up 10% YTD, our bond proxy, TLT (an ETF), is now at an important inflection point. Recently, it made a lower low and a lower high. Today, it bounced off an upward trendline that runs parallel to the dominant trendline for the past 6 months. It must stay above this trendline and continue daily closes above the line in the sand (dashed line at 110.67), in order to remain long. If it complies, and can clear the last two recent highs, I would consider adding to this position (let’s worry about that later). If it does not hold here, we’ll take our 10% and find something else that likes to increase our portfolio.
Have a safe 4th of July. Remember our independence!
The measured move was miscalculated in my 06/06/14 post (see pink arrows in the chart below – this is the measured move, which = $72.50, not $73.50). Accordingly, I am marking this as a target hit, but with a lower case “booyah.” What now? If long, move your stop-loss up -or- sell and enjoy your profit. Now we wait for price to give us a clue as to its next move.
When the Ukrainian/Crimean crisis first evolved, Russian equities sold off hard. We like to use ETFs to capture full sectors, markets, or countries. The ETF for Russia is RSX. Since the March panic sell off, RSX has rebounded to a trendline that has provided resistance for the past 7 years. This meeting with the upper trendline coincides with a Fibonacciretracement level of 61.8%. This, along with confirmation of several momentum indicators, make shorting RSX a low risk / high reward trade. Stop-loss = check. Targets = check. Our risk/reward profile is well defined. We like that. A break above the upper trendline would be bullish for Russia (RSX) and would change our stance. We’re not concerned with being right. We’re concerned about being on the right side of the trade.
One of the stocks I follow is BMO. Shocking, I know. We’ve been tracking the price moves of BMO well. And now it is decision time. Price is consolidating into a pattern that will either lead to more new highs at 73.50 -or- correct to 66.50 (which could morph into a zigzag correction to 65.25). Either can happen, but I put the correction to 66.50 or 65.25 as more likely based on other indicators I follow -and- the momentum divergences on the weekly and monthly time frame. We should be able to determine direction by the end of this week. Price knows more than we do. Click the image below to embiggen