It’s that time of the week again so here’s my FTSE 100 analysis and overview of what might happen in the week ahead. The downward move that ended on 11th April at a low of 5576 could be tested in the week ahead. This downward move was has retraced back to around 5820 before falling dramatically on Friday. The fall has a ways to go before breaching the April 11th low but if it does I would expect the fall to continue to around 5400 before finding support. The 20, 50 and 200 day EMAs don’t confirm anything at the moment except that there is no trend in place at the moment.
Daily FTSE 100 Chart 5-May-12
If we take a look at the weekly version of the FTSE 100 chart we can see that the start of a new down trend could be forming. We hit a new low three weeks ago after four weeks of consecutive falls. Since then we’ve had two weeks of gains retracing some of the previous falls and this week has seen a dramatic fall back to around the closing price of the most recent lowest week. For the down trend to be confirmed on the weekly chart price needs to fall below the most recent low. With the state of the markets at the moment I think we could see this downtrend forming an continuing.
Weekly FTSE 100 Chart 5-May-12
Going back to the daily chart there could be a potential head and shoulders chart pattern forming which can be the sign of a reversal. However with no clear signal either way anything goes from a trade direction stand point. Will a down trend emerge over the coming weeks, well that remains to be seen, and as always anything can and will happen.
Watching stocks and waiting for the right time to enter is the key to successful spread betting(at least that’s my opinion anyway). In the past I have fallen foul to rushing in but there really is no need. When you find a trade that meets your strategy criteria, unless you have entry signals included in your strategy then it doesn’t always mean you should enter right away. For example, I’ve recently switched back to finding trends and trading them. (In my view I think it one of the only ways to make any money spread betting and so far it seems like it might be paying off). Anyway back to the topic at hand, I rushed the last few trades I made when I should’ve watched them for a few days to see what happened. When using a trend following strategy it’s all well and good finding a stock that is trending well but if you enter at the wrong time then you may as well just pick a stock at random and flip a coin.
A good trending stock will have a series of higher highs and higher lows for an uptrend(reverse for a down trend) and so it’s best to wait until the stock hits a new higher high, falls back a little and then enter. This is a very common strategy know as buying dips and Malcolm Pryor has some excellent ways to achieve buying dips in his enormously popular financial spread betting handbook. If you don’t have a copy I suggest you get one and read it cover to cover. It’s one of the first spread betting books I ever read and I always seem to end up coming back to it.
So back to the point of todays topic. I had a look yesterday for some new trades and there are a few stocks that are trending nicely and are most certainly potential trades. I was tempted to rush in and just buy each of them straight away but I managed to hold myself back and wait for the dips in price. Then I’ll look to enter with a fairly close stop in case things don’t go to plan. The biggest issue I have is how to know when price has dipped enough. The honest answer is there is no way of knowing when price has dropped back enough and I’m using a bit of gut instinct here that I seem to have developed over my three years of on again off again spread betting. Hopefully my gut is helping me out and before too long it will just be on again spread betting but we’ll wait and see on that front. I am starting to feel a little more confident in my own abilities as a trader but if there’s on thing I know for sure it’s a little confidence can turn in to a big disaster. Get overconfident and cocky, thinking you can’t go wrong, and believe me you could lose the shirt off your back in the blink of an eye. Best for now to keep thinking I’m no good at spread betting.
The new trades that I found yesterday are on my watch list and I will keep an eye on price over the next few days. If and when feel the time is right I’ll look to enter. If that time never comes then so be it, there’s always tomorrows trades.
Until next time,
“May the markets be with you!”
Harry,
The Spread Betting Beginner
Well here it s my eagerly awaited FTSE 100 weekly analysis. I didn’t get half as much time to do the things I wanted this weekend so those that are awaiting my updated spread bets list will have to wait just that little while longer. I’m hoping to get to it at some point this week but never say never.
Anyway onto the FTSE 100 analysis. Well it’s been another choppy week and when the markets dropped on Monday I thought the down trend was about to be confirmed but ever since then we’ve had a few days of rises. The 20, 50 & 200 day EMAs are all level with the 20 below the 50 but above the 200 so these tell us that there is no clear trend in the market at the moment. The way the chart looks at the moment it could go either way up or down so I will be looking for either long or short trades again this week, if I get the time that is.
For the people who are into pattern spotting it looks like there is a symmetrical triangle pattern in progress, but as for what that means I have no idea. I guess I need to do some more research in to price patterns. When I get some time I’ll look into them and add a new section to the technical analysis section so keep an eye out for that.
Well that’s it for this week, short and sweet. My outlook for the market is mixed which isn’t much use if you plan on trading the FTSE. Maybe next week will be different.
Advert: If you are new to spread betting and would like to try it please consider opening an account with Capital Spreads or SpreadCo. It’s how I keep Spread Betting Beginner free for all.
It’s been a mega busy week for me since the weekend really. My Folks went out to Spain but my nan was in Hospital so I went back to give her some company over the weekend and then back to work which is hectic at the minute so I’ve had no chance to look for new spread bets. I probably wont get a chance to take a look tomorrow either as I have a deadline looming for the 30th April but I do intend to spend some time at the weekend doing a review of my current open positions.
You may recall I said I would be keeping a close eye on some of my more recent trades as they need to return to their trends for them to be worth while. Well I haven’t been keeping a close enough eye so I need to check the charts to see how they are coming along. The trades are all still open as none of the stops have been hit yet and when I checked them earlier they all still had a ways to go before the stops would be hit but that’s not really the point. The idea was that the trades would return to their trends and if they didn’t within a reasonable time frame then I would cut the trade and look for better opportunities. I just need to check on how the trends are doing.
That’s really all I have for my spread betting update. No new trades and I still haven’t had the time to expose my most recent trades. My plan is to make the necessary changes to my position logging utility over the weekend and then I should be able to display my trades for all to see. I’m sure I said I would try and do the same last weekend but other, unavoidable, circumstances dictated otherwise.
Not that I don’t already have enough to do but my FTSE 100 analysis will also be added at the weekend again.
Until next time,
“May the markets be with you!”
Harry,
The Spread Betting Beginner
If you are new to spread betting and would like to try it please consider opening an account with Capital Spreads or SpreadCo. It’s how I keep Spread Betting Beginner free for all.
Well the spread betting weeks just come and go and it’s time for my weekly FTSE 100 analysis yet again. The main day for the FTSE this week was Tuesday when it rose over 100 points. The question is was it just a retracement of the falls from the previous week or will rise continue? Well looking at the chart it doesn’t look too promising for the bulls. The price action shows a recent down trend formation, lower lows and lower highs. The 20 EMA has firmly passed through the 50 EMA but seems to be levelling out with the FTSE ranging the last few days of the week. If the FTSE falls next week and passes through the most recent low of 5576 then I suspect the FTSE will be falling some more maybe to 5500 or lower. If this does happen the it will drag down the 20 & 50 day EMAs possibly poking through the 200 day EMA. It will take a while but if this does happen then the EMAs will start to confirm the down trend that could potentially be occurring.
Chart Copyright of SpreadCo ©2012
My outlook for the week is bearish but having said that it doesn’t mean I’ll pass up a long position if a good up trending stock should come along. My rule is trade short in a down trending market, trade long in an up trending market but when there is no real trend anything goes.
I have to say I am glad I started doing my weekly FTSE analysis again. People who have been reading this blog for some time will know that I have a pension that tracks the FTSE and although I cannot profit from the FTSE falling I can try and wait out the down trends to make the most of the up trends.
