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Friday, 25 July 2014

140725 EUR/USD plunges

The EUR/USD has plunged again.

Click on image for a larger view.

Where will the present downtrend of the EUR/USD end? Looking at the long-term chart (since 1990), whichever line we take (A or B) as the Support Line, the downtrend has a long way to go yet: probably as far as $1.3022 at least. What could abort the downtrend in the meantime? A reversal of policy of the ECB; worse than expected performance of the US economy with extension of quantitive easing, or better than expected financial peformance in Europe.

Thursday, 24 July 2014

140724 EUR/JPY mirrors EUR/USD but faster

As the US Dollar slips against the Yen and the Euro slips against the Dollar, the EUR/JPY miorrors the EUR/USD, but at a faster rate, around 25% faster:

Click on image for larger view.

At first sight, this suggests that the EUR/JPY is a better short punt than the EUR/USD. However, at this moment in time, the EUR/JPY is nearer the bottom of its range than the EUR/USD, making the latter the safer punt.

Wednesday, 23 July 2014

140723 A look at Japanese Yen v. the Euro

petegibb78, on asked me to have a look at EUR/JPY.

First, I had a look to see how the Japanese Index was doing:

Japanese shares have been up and down quite a lot since the 1990s. 2013 saw a strong uptrend, which has now ended and a downtrend has commenced. Besides the trend lines (Resistance Line joining the tops and Support Line joining the bottoms), I also display two simple moving averages a 10-month and a 20-month. When the price moves away from the moving average, a correction follows. Recently this correction has taken place, as the price swung down. The longer-term moving average is now edging its way over the shorter-term moving average. This supports the notion highlighted by the trend lines that a downtrend is afoot.

While the western exchanges are still progressing upwards, and heading away from the moving averages, in Japan the downtrend has already begun.

Next, I look to see how the US Dollar is doing against the Yen:

The Dollar rose strongly against the Yen in the last year, but now is beginning to trend downwards.  Since the Euro is trending downwards against the Dollar, it must be trending doubly downwards against the Yen.

Now to look at the Euro against the Yen:

The Euro has been trending upwards against the Yen, but in recent months has turned downwards. While the western stock markets have not yet reversed to a downtrend, this will follow soon. Betting on the EURJPY going down is strongly indicated, in my opinion.

Tuesday, 22 July 2014

140722 EUR/USD Plummets

Early today, the Euro plummeted against the US Dollar.

Simple trend lines drawn on the chart show the dive continuing to $1.333 and then a swing back to $1.342. For a larger, and clearer, view, click on the image.

Unfortunately, my entire Shares Punt fund is tied up with my shorts on Intel Corp and Twitter. Should I exit those and put my money on a EUR/USD Short instead? The problem with that is that Intel and Twitter could actually fall now, as I had predicted, and there is really nothing stopping the Euro from "prematurely" bouncing back (though for a medium-term, rather than a short-term, punt, it is reasonably safe to predict that the Euro downtrend will continue for the next few months).

Sunday, 20 July 2014

140719S&P 500: Uptrend may continue, but downswing is imminent

Click chart to enlarge.

This is a one-year chart of the SPX500 (Tradingview's name for the S&P 500). Even though the Uptrend may continue, it looks like a downswing is imminent, dropping the price from 1976 to at least 1940 over the coming week.

This is one option I will bear in mind for my Shares Punt when the market opens tomorrow.

Friday, 18 July 2014

140718: EUR/USD limit price adjustment

I have drawn lines on the following chart of the Euro against the US Dollar in an effort to predict the top of the present projected upswing.

If the current down-trend of the Euro against the Dollar continues, the price will not break through the Trend Resistance Line. My projection of the Resistance Line of the projected upswing follows the slope of the previous upswing (of Jun/ Jul). The blue horizontal line marks the place where the projected upswing Resistance Line meets the Trend Resistance Line. Though the projected upswing may peak above this point, any such peak will be very temporary. The Blue Line, then, marks a good level at which to renew my punt against the EUR/USD. I have adjusted my limit order accordingly.

140718 Intel spike bottom projected

On 16 July, Intel (INTC) share price jumped by almost 10% in anticipation of its quarterly report. I placed a punt on the price dropping from that spike. I placed a limited order to close the trade at $32, which was a reasonable expectation if the price fell sharply from the top of the spike. Now I want to project the most likely bottom to the spike, seeing that the price is falling not so sharply, and adjust my exit price accordingly.

Click on the image for a larger view.

The second half of May saw an acceleration in Intel's upwards trend, the price breaking through the Old Resistance Line. The market  correction many people expect may bring a substantial downwards correction, but for the moment we are concerned only with predicting the bottom of the  current spike.

The dotted line shows the price falling to the current Support Line, and bottoming at $32.49. To be reasonably sure of successfully closing the Trade, I have adjusted my exit price to $33.

Thursday, 17 July 2014

140717 UPDATE: Intel & Abbot spikes

I observed yesterday that the EUR/USD, having taken a plunge, had levelled out. I, therefore, closed my trade, making funds available for an alternative punt. I placed a limited order to short the security again should it rise to $1.359. The following image, shows the position of the EUR/USD at this moment in time (15.45 GMT).

I have drawn trend-lines to indicate the level of the previous upswing suitable for a short punt and the slope along which a new upswing might develop. A horizontal line marks the $1.359 level. The prospect of it reaching that level is not immediate, but could happen before the end of the month. Perhaps the next slump in price will happen around the  time of the August meeting of the ECB.

I then, yesterday, considered some shares that were about to report. I observed that Abbot Laboratories were to report before opening this morning and might experience a spike in anticipation. However, the price was falling at the time of my observation - and time for the spike to begin to happen was running out - so I passed this opportunity. The following chart of Abbot (ABT) shows the missed opportunity.

The horizontal line shows the price level at the time of my observation.

I then passed on to consider Intel Corp, which was reporting after closing yesterday. It had already spiked by 7% and seemed to be levelling off. I took a punt on the price falling when the report issued. The following chart illustrates this punt.

The green line shows the level of my punt (that the price would fall). The price resumed its rise after my bet was placed. After results issued, the price began to fall. It remains to be seen whether it will fall far enough for me to make a profit. The red horizontal line shows the levl at which I have placed the order to close the trade.

The punt is based on my observation that companies that are doing well in the market place tend to have spikes in their share price just before results, whether annual or just quarterly, are issued. This gives two opportunities for a punt: one on the price rising and the second on the price falling.

By the way, where do I get my information as to which companies are about to report: Yahoo Finance/ Calendars 

Sunday, 13 July 2014

140713: What goes up does not have to come down, but

What goes up does not have to come down.

The classic story of stocks and shares is that of a small amount invested which, when left in position for years, grows into a fortune.

This is illustrated by the following chart of the Dow Jones Industrials Index.

The graph shows that the DOWI grew from 1,000 in 1980 to almost 17,000 today, a 17-fold increase in value. There is little doubt that it will continue to rise in the future.

However, the market sits in judgement all the time. When the value grows too rapidly, it deems a correction to be necessary to bring it back into line.

A simple line joining the Peaks (a Resistance Line) and another joining the bottoms (a Support Line) delineats the Range within which it is "permitted" by market opinion to move.

The pattern followed by the Dow (and other indexes) is to fall sharply when it hits the Resistance Line (with some lee-way as to where the turning point will be). The Dow (and other indexes) has now hit this Resistance Line and will surely, in the near future, suffer a rather severe correction.

On the other hand there are those who say there is no pattern!!!

Friday, 11 July 2014

140711: S&P 500: Parabola explored further

In my previous post, I showed a graph of the S&P going back to 1990, with 4 parabolas drawn. I now focus on the last of these parabolas, looking for clues as to whether the peak of the parabola has really been reached, or whether this is a false peak.

If we are at a peak, we can expect the value to decline gradually at first and then accelerate down the side of the parabola. I suppose no-one can predict how low it will fall, but the Stock Traders' Almanac has previously predicted a fall of 30% in the indexes this year and this is echoed in the forecast of Financial Forecast Center given in a previous post of mine. That forecast now predicts that the correction will occur between now and October, with a recovery starting at the beginning of October.

Actually, the Almanac has the Index falling as far as 1300, but the Forecast Center has the recovery setting in at 1700 (from the present 1963).

140711: Markets reach pinnacle of parabola

The following is a chart of the S&P 500, on which I have drawn parabolas representing the present and the last two-and-a-half peaks. We now appear to be on the crest of a parabola and the down-slope seems imminent. (Click the image for a larger view).

Friday, 4 July 2014

140704: S&P Forecast

I have observed that the markets are overheated and asking for a severe correction, but prices continue to rise. The following diagram of the S&P500 from Financial Forecast Center may have the right of it. This predicts the S&P (like other indexes) reaching a peak this month (Jul 2014) and then plunging severely from here to December next.

Thursday, 3 July 2014

140703: Shares Punt: ECB meeting causes volatility in EUR/USD

As the press-conference following this morning's meeting of the ECB gets undeer way, the Euro drops from $1.3650 to $1.3620. This presages a re-commencement of the Euro losing value against the US Dollar. I take a punt on the EUR/USD falling.

My punt immediately runs into a loss, because just then the Euro begins a pullback. I exit to minimise loss and then re-open the short position when the pullback seems to have run out of steam.

The race is on - swing down, swing up, five times a minute. What excitement!