Stock Market Enigma

February 10, 2016

Stock Market Enigma:

“It all has a 2008 global crisis feel about it, without the underlying causes. Shares in the big four local banks fell by a surreal 4 per cent to 5.2 per cent on Tuesday.”

This extract from the Sydney Morning Herald’s Malcolm Maiden this morning resonated with me. It’s been like a slow moving train that you can see in the distance while you just stand still on the tracks watching the light getting closer and closer.

The other major eye catcher this morning was @Renegade_Inc’s table on Twitter which focuses on the stock price of the major US and EU banks through 2016. 25% down average across the board in barely a month?

Comparison of bank stocks through 2016

Image: Twitter: Renegade_Inc

Eye catching indeed!

So we’re hearing all this talk about bargain hunters looking for value after a sell off in stocks. But no matter what your long only stocks financial advisor will tell you, just because the market goes down a bit doesn’t automatically mean that there is value and it’s a good time to buy.

I don’t want to repeat myself every day but so long as the headlines are talking about ‘value’ in stocks, I have to keep posting this weekly S&P 500 chart and the major trend line support across Indices idea that we’ve been stalking.

S&P 500 Weekly:
Indices chart, SP500 Weekly, 160210
Click on chart to see a larger view.

As long as that weekly trend line is holding, then normal bullish service should continue across ALL Indices.

S&P 500 Daily:
Indices chart, SP500 Daily, 160210
Click on chart to see a larger view.

The daily chart shows price action at the lows a lot clearer with lows and trend line support continuing to hold up.

BUT. What happens when this level goes? Talking about buying at index trend line support sounds like a good strategy in theory. But the threat of a huge snap is why I’m so wary of talking about ‘value’ up here.

Stops, stops, stops!

———-

Chart of the Day:
Yesterday’s look at USD/JPY originally was to include the Nikkei225, but I got too carried away on the Forex side so decided to split it into today’s chart of the day.

Nikkei 225 Weekly:
Indices chart, Nikkei225 Weekly, 160210
Click on chart to see a larger view.

The US market leading other markets is highlighted by price action in Japanese stocks with the Japanese fundamental shift wanting to break the Nikkei, but just not being able to do so.

Nikkei 225 Daily:
Indices chart, Nikkei225 Daily, 160210
Click on chart to see a larger view.

The daily again shows the lows being broken, but long wicks showing that buyers aren’t ready to give up the level yet. You can do the same thing across all of the major stock indexes. It’s all about that level in the S&P 500.

———

On the Calendar Wednesday:
CNY Bank Holiday
AUD HIA New Home Sales m/m

GBP Manufacturing Production m/m

USD Fed Chair Yellen Testifies
USD Crude Oil Inventories

Do you see opportunity trading Indices? Take advantage on your $50,000 free Forex demo account.

Dane Williams – @VantageFX

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