UK Stockmarket 2009 and beyond

tradetime

cloud_dog wrote: »

We haven't mentioned one of our old much discussed stocks for a while but.... Would any of you TA bods wish to review the chart for FRES?

Does it look like the SP may be about to complete a long inverse H&S starting from December 09? Or, is the time frame involved too large so as to invalidate it?

Hi cloud _dog, TA is as much about interpretation as anything else and an mportant part of interpretation is context. H&S patterns are generally viewed as reversal patterns. An upright H&S reversing an uptrend and a inverted H&S reversing a downtrend. Therefore to place it in that context you need a prior trend to reverse. For the most part FRES has been in an uptrend for just over a year now, so there is no prior downtrend to reverse. The only downtrend you can find is in the formation of the pattern itself



Looking at the chart I can see what you are referring to, and for me the pattern in isolation would constitute an inverted H&S of sorts.



No, it's not a textbook, "picture perfect" pattern, but it is very easy to search charts and find "picture perfect" patterns to populate textbooks, often one of the reasons it is hard for people to transition from textbooks to real life. The question then becomes, how much weight can you apply to a pattern which occurs out of context?

Some may view it in this context as a continuation pattern, if so then a measured move off that pattern would take you to roughly 1100p but as I say, how much weight can you apply to a pattern occuring out of context? Always assuming you accept it as a valid pattern in the first place. I note turbobob, does not, and I understand that, TA always comes back to personal interpretation of the individual trader. It's purpose for a trader is to arrive at an actionable conclusion and assist with the management of the trade, if indeed the conclusion was to take a trade. As such within reason, there is no right or wrong view.

Leaving the pattern aside, we've had a recent pullback in Jan that gave us a swing low on the weekly of 647p which has led to the current uptrend since Feb. The stock is now above the rising 5, 10, 20, and 50 day ma's.



Indicator wise: Daily CCI is 141 and rising off a recent pullback in the indicator from 209 to 50, so still room on the upside. RSI is 63 and rising which is bullish, MACD is above the zero line and rising and above the signal line, which is also a positive. Stocastics a little overbought and DMI modestly positive (bullish)

The break above the "neckline" or simply downtrend line didn't really cause a pop in volume which is a shame, but it is what it is. 935p should be the key level going forwards on the upside, a breakout there will be a blue skies breakout and should draw a lot of volume. On the downside really 647p is the key support., though there should be nearer support in the 800 - 820p

The big influence on this stock will be the price of silver and prehaps gold, not sure how much gold as a percentage of rev they produce. Both of those metals are behaving quite positively at the moment. From your perspective, I think it's more about the fundamentals, which have to support the longer term view.

sabretoothtigger

The break in the neckline is the same thing I have, looks like a new trend possibly


I put it into a website that calculates TA (or tries to) and it said its a sell.

You dont have to take that literally just reporting it in, Ive not found it to be perfectly accurate but maybe roughly

http://uk.stoxline.com/q_uk.php?s=fres.l


This one is a bit short term, 2 months history, uptrend http://www.biancatrends.com/FRES.php




This site if its still working properly tries to judge stocks on fundamentals. I remember it did remove the major banks from its list of 'quality plays' in 2008

Again Im not sure if its accurate and it is just a computer screener automated thing

Fresnillo is not listed despite being a FTSE 100 stock and its biased to blue chips

http://www.investinvalue.com/1/selectplaces.php?place=U.K.

Value Investing is determining the Intrinsic value of a stock, and investing in it if the difference between this value and the stock price provides a sufficient Margin of Safety.
This site is based on Benjamin Graham 's book : The Intelligent Investor, first published in 1949. Benjamin Graham is known to be the father of Value Investing and has been the teacher of Warren Buffett at Columbia University.

cloud_dog

Tradetime, sabretoothtiger, turbobob

Many thanks for your responses and the indepth analysis, very generous of you all.

cloud_dog

turbobob

Very interesting write up trade

Not sure on those automatic technical analysis sites STT - it would be helpful to know how they come to the "sell" conclusion as I can't see it. Here's another one that says "buy" :rotfl: http://www.barchart.com/opinions/FRES.LS

tradetime

You're welcome cloud_dog, just my view anyway, obviously I know you'll dyor inline with your own investment / trading style.

Thanx turbobob, I don't do much analysis of individual stocks so it made a change. I expect the price of gold and silver to move much higher over the course of the next few years. I suspect that will be good for FRES, assuming of course the stock itself isn't fundamentally over priced. (I don't do fundamentals)

Likely a resumption of the prior trend STT, ie UP. Gold and silver have shown good strength since Feb despite the Dollar strength. Seasonally I believe they say gold tends to be weak from around now into the autumn, I'm not big on seasonal trends, being predominantly short term, so I don't know. Looks like we want to test the highs soon. Will be interesting to watch during the coming year.

On a side note, Monday marks the unofficial start of earnings season in the US when Alcoa reports after the close, so we can look forward to a pick up in volatility over the coming weeks.

sabretoothtigger

So soon ? I thought earnings wasnt till July when GS reported around then last year and meredith whitney gave us that big bid up for them


I guess its 3 months now since Alcoa gave level results and the market started falling on the news. So I guess that matches up with them reporting again on 12th of July



USA Tax returns by April 15th also, Im not quite sure if that means some will stop buying stocks like over here with ISA maybe.

Around this time last year I started thinking well it should pull back a bit now, it didnt happen till mid May though


Regarding XUKS and shorting the ftse, I think in effect that is like going long on the currency so that might be a reasonable guide to how likely and how much falls might occur


That Neptune Japan fund has done well recently, 40% of the value is shorting the yen I think.
Despite all the british gloom that bet worked out so far. Im 50/50 if it'll continue, should be less certain for a while by my reckoning


SP500 in gold - http://img687.imageshack.us/img687/2069/sc1952154.png
Doug Kass called the top in Mid August and he wasnt wrong really

ie. If Dollar index falls more then stocks rise then this is a fake bull market

This is a more readable version, the gradient is not up is the main point to take away
http://img130.imageshack.us/img130/3815/sc2125477.png

tradetime

Earnings season in the US has in fact already started, Alcoa, as the first major company to report is thus referenced as marking the "Unofficial" start.

Afaik the US tax year, and thus tax loss adjustment strategies applied by traders in the US is December, I'm assuming the "tax returns" date is much like me having to file my return by 31st October, obviously any sales at a loss I wanted to factor in would have taken place by the April year end deadline.

ie. If Dollar index falls more then stocks rise then this is a fake bull market

Thanx will read that in a bit. As the US moves further into recovery we should see the Dollar rise alongside equities, and indeed this is already happening, and should continue. The inverse relationship we were able to key off for Dollar / equity trading is now no longer reliable, you will see it here and there, on occasion, but it is no longer a reliable indicator, not sure how that reflects on his view, but as I say, I'll read it in a bit.

Oops, thought one of those was an article never really paid much attention to the gold SPX relationship, Robert Prechter is alway throwing on up of Dow : Gold (same thing) Gold prices in lot's of things, mainly fears of something, be it fear of inflation, or fear of currency crises as are currently bubbling under the surface

cloud_dog

sabretoothtigger wrote: »

Doug Kass called the top in Mid August and he wasnt wrong really

ie. If Dollar index falls more then stocks rise then this is a fake bull market.

Thought I'd google 'your' Doug Kass and found that he has 20 predictions for 2010, can't say I like his predictions as a resource / PM investor, and whats even worse is that he appears to have called the relative recent strength in the US$ correctly (No. 3).

I just hope his other financial predictions aren't too accurate

tradetime

Btw, on the subject of H&S patterns.......Here's one I am watching. Pretty isn't it? :eek:

sabretoothtigger

Owch, looks potentially painfull


I dont have an article for the above but this one by soros is a fair summary I think. Gold does contain fear I agree, its speculative.


http://www.bloomberg.com/apps/news?pid=20601083&sid=aoU43SK8lHoI

“Probably Britain is not at the limit of its borrowing capacity,” he said. Still, “Britain is in a very difficult situation.”

At about 12 percent of gross domestic product, the U.K. deficit rivals that of Greece. Net debt climbed to 60.3 percent of GDP in February.