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Monday, 29 September 2014

The Few against the Many

My Sunday newspaper (Sunday Independent, attrib. Reuters) tells me "Stock markets set to keep rising well into 2015." After a sluggish end of week, "Nearly all the almost 250 analysts and investors polled in the past week predicted markets would rally, with several indexes reaching new highs."

I dare to take the opposite view.

They say: "Share prices are rising so they will keep rising." We have heard that before.
I say: "Share prices are inflated. Interest rates are deflated. Interest rates must rise. Share prices must fall."

Click to enlarge image.

This morning's downturn (with subsequent rebound) confirms the emergence of a new Resistance Line (R), as the Parobola-top, signalling the end of the present uptrend, takes shape. Junk bonds have already fallen significantly in price, indicating that the market is gearing up for higher interest rates and lower equity prices. The Sterling interest rate is to go up in 2015, which is not too far away now, and the USA will follow soon after.

Markets don't wait. They anticipate. We could even have another Black Monday next week, sez I.

Friday, 26 September 2014

Market Collapse imminent

I am convinced that the FTSE 100 index (index of 100 leading Great Britain shares) is about to suffer a severe correction. I also think an even more severe correction will hit American indexes, but possibly not so quickly. Click on an image for a larger view.

These charts predict a 15% falll for the FTSE (already perhaps begun) and a 40% fall for the S&P500 (wait for it to start).

Friday, 19 September 2014

Pound Sterling rallies a little after Scottish poll

The Pound Sterling has rallied against the US Dollar (GBP/USD) following the "No" vote in the Scottish referendum. It should not, however, be expected to carry the price back to the level it held before the debate on Scottish independence started.

Click on the image to enlarge.

The graph shows the progress of the Great Britain Pound (Sterling) against the US Dollar over the past 5 years. It has been trending up and down within bands marked by Trend Lines A and B. The Horizontal red line shows the position it held before the Scottish referendum on independence drove the price down. This slump, however, was just the continuation of an existing downtrend. The rejection of Independence has brought an upswing in the price. The strength of the American economy, and the political confusion over devolution of powers within the United Kingdom, however, will tend to continue the sentiment that supports the downtrend. Conclusion: it is unlikely that the present upswing will bring the price back to $1.66, held before the debate on Scottish independence started. The upswing will quickly run out of steam and allow the downtrend to continue.

Thursday, 18 September 2014

Significant events: today Scots vote, tomorrow Alibaba launch

Two significant events for share punters:
  • Today: Scot vote on Independence. If yes, GBP will rebound; if no, it will have a volatile period.
  • Tomorrow: Alibaba launch, in money terms the largest ever on the USA market.


Wednesday, 17 September 2014

S&P Downswing aborts

Click on image to enlarge.

My predictions proved incorrect. The expected downswing has aborted, to the detriment of my Shares Punt. It is on the cards that it will resume, and though the markets march strongly ahead despite all my nay-saying, there is still a large correction due before the end of the year.

Friday, 12 September 2014

EUR/USD Joining the dots: downtrend to end soon

Click to enlarge the image.

Just for fun (or out of frustration) I joined up all the Dotted Lines. This produced a pretty picture until I added the Bollinger Bands, which messed up the pretty diamond shape. The net outcome is that, while the present strong downslope was predictable, where it will end is not so clear. From the chart, it would appear that the end will be soon, possibly around $1.290. The Fundamentals indicate otherwise. US interest rates will rise sooner than Euro rates. The ECB will introduce vigorous Quantitive Easing. Both of these factors indicate a continuing decline of the Euro. However, ECB freeing up bank cash will stimulate EU economic growth and maybe even inflation. This won't be immediate. The markets are, however, wiser in their ways than the economists. They respond more to sentiment than to analysis. The charts have often been right where the analysts were wrong. Summary: I don't trust the present downtrend to continue much longer. A bounce-back at €1.290, lasting a few months, and then either a serious bounce off the Resistance Line, bringing a deeper down-trend, or a break-through of the Resistance Line, bringing a serious up-trend. I can go no further.

Wednesday, 10 September 2014

Market plunge now due; may affect Apples resurrection

Click on image to enlarge.

As in my previous post, I show the Ripple Bounds and the Down-swing trend line of S&P500. Following the previous downswing pattern, a plunge is now due, today.

As to Apple:

Having spiked yesterday on the occasion of its special event, and fallen back to pre-spike levels, Apple should now climb back up to $103 - unless the general flight of cash from the markets today impacts here. Despite a real fear that the market slump may have negative impact, I have re-opened my position on Apple. This is daring, as the sun-shine in Dublin is too bright to allow me to keep watch over such mundane matters for the purpose of making a rapid exit if it goes the other way.

Alibaba IPO - Trade Alibaba shares

The Alibaba IPO which is imminent (meaning it will happen any day very soon) will, apparently, be the biggest company launch ever in the USA. Buy (or sell) Alibaba shares here, but be warned: CFDs are bets on whether the share will rise or fall: you can lose your entire bet, or make a remarkable profit, depending on which way the shares go, up or down.


S&P500 New Trend emerging

Click to enlarge image.

On the chart, I draw the established trend lines and the emerging trend lines that I perceive, which I have labelled "New Trend." A downswing is under way, which I predict as following the slope of the last downswing, complete with Ripples and, no doubt, plunges. Should this downswing, as I expect, break through the Established Trend's Support Line, this does not necessarily mean that the Trend Reversal has set in, and the graph may find resistance at the New Trend's Support Line. However, a Trend Reversal, complete with a deep plunge, is still on the cards.

Tuesday, 9 September 2014

Apple spikes and falls back, as expected

"Apple debuted Apple Watch at an event near its headquarters in Cupertino, along with Apple Pay, which is designed to make iPhones into a digital wallet. The company also showed the new iPhone 6 and iPhone 6 Plus, which come in screen sizes of 4.7 inches and 5.5 inches" (Yahoo this evening).

The event caused the share to spike from $98.31 at start of the day to $103, and then to fall back down as people (including myself) took profit. No doubt the new products will receive wider appreciation in the days to come, which should see the price crawl back up.

S&P ready to swing downwards

Pausing now at short-term Resistance Line D, the graph seems ready to continue its downswing along Line F. A plunge in value, following the pattern of the previous downswing may be imminent.

Short on Euro

Having paused after its plunge following September's ECB meeting, the Euro has revived its decline against the US Dollar.

Another opportunity I possibly can't pass is an imminent downswing in the markets, if not a trend reversal. The following graph of the S&P 500 illustrates the issue:

Click on the image to enlarge.

Lines A and B enclose the range through which the S&P has been moving over the last year: a strong upward slope. Line C shows how the Resistance has moderated, possibly indicating that the top of the parabola has been reached or is not far away. The value of the S&P500 index naturally swings up and down between Support Line and Resistance Line. Line E shows the direction of the last downswing. Stock Market behaviour, like all human behaviour, follows patterns, so I predict tha Line E will repeat as Line F. Over the past few posts, I have moved Line F progressively eastwards, as the graph finds resistance at temporary Resistance Line D. Sooner or later, and now probably sooner, the graph will break through Line D and then plunge suddenly towards Line A. If it breaks through Line A, this may indicate that the uptrend of the markets has finished and a downtrend, or down-plunge is about to happen.

Monday, 8 September 2014

S&P500 to continue to yo-yo within small range?

Click on image for larger view.

S&P dropped predictably to1996 today and then swung back up to 2003. My projected downswing Line C now moves another step to the east. I expect a mini peak at 2005, when it will bounce off Resistance Line B and move back towards 1996 again. At some such downswing I expect it to break through Support Line A and give is a real downswing.

Apple Special Event tomorrow: I bet the share will rise

I had a look at Apple.

The share has fallen from $103 to $98 in anticipation of nothing special happening at tomorrow's Special Event. I expect that there will be some excitement, so I bet on the share rising to $105, a movement that would bring me €265 profit.

Meanwhile, today's drop of S&P5 HAS proved to be a ripple, as shown in the following chart, although a downswing could easily resume from this point:

Sunday, 7 September 2014

Hang Seng also due a down-swing?

If the S&P500, and the other American indexes, are due a down-swing, so also may the Hang Seng index, as the following chart, posted by me today on, shows:

Click on image to enlarge.

The Hang Seng index is indicated by the blue graph line. The dotted blue trend lines are the Resistance and Support Lines. The graph is touching the Resistance Line, which usually indicates that a down-swing, back to the bottom trend line, is probably imminent. The shaded area is the range contained within the Bollinger Bands, and the red line is the median position between these bands.

While the drawing of trend lines is intuitive (joining the tops to form a Resistance Line and the bottoms to form a Support Line), Bollinger Bands, invented by John Bollinger, are calculated automatically by computer program using a clever formula and can be interpreted to predict trend reversals as well as swings. The median line is the Moving Average of the security price based on 20 periods, in other words a point on the red line is the average of the price of the security over the last 20 periods, which, of course, keeps changing, or "moving," as time passes. The outer lines are the Standard Deviations from the median line. Widening of the bands indicated increased volatility; "W" shaped bottoms in a graph, without breaking the lower bound, indicate a down-trend coming to an end, while "M" shaped tops, without breaking the upper bound, indicate an up-trend ending.

Since the band is not particularly wide at the present time, the index is shown not to be volatile and the present trend should continue for now.

The recent weak W bottom on the graph suggests that this time the graph may not bounce off the Resistance Line, but continue upwards.

While a graph more often than not bounces off the Resistance Line, the Bollinger Bands suggest that the signal is unclear. I intend to pass this opportunity.

Wednesday, 3 September 2014

Shares Punt - Take profit on EUR/JPY; open short on CORN

I had a profit target of €20 on EUR/JPY (good enough return on a €100 bet) and closed the position when it hit this target.

Having a look at "Risers and Fallers" in the Plus500 database, I see that Wheat and Corn (commodities) are falling sharply. I tested Wheat, but found that the maintenance margin for the minimum holding was over €100, so passed on to Corn. I opened a short position on Corn, with a target profit of €50.

My target profit on EUR/USD is $225, because of the propability of a fall around the time of tomorrow's meeting.

My total Maintenance Margin for the two continuing positions (EUR/USD and Corn) is at present €94.56.