Long-term, what does the S&P chart suggest

The S&P 500 is, I think, a reasonable guide for us when considering our long-term FTSE 350 top ten.

The chart we are considering is the monthly chart, and this snip covers the last few years. The month just gone finished with what is known, technically, as a doji; this is indecision or a trading range bar.

The chart has been steady, having now completed a measured move up from the last pullback at about 1800. Also, the chart is currently at a significant number, being 2400.

The significant number, completion of a measured move and finishing the month as a doji all point to a pullback at this stage. Albeit a small (in monthly chart terms) pull back; what the technical analyst would call an anticipated bear flag.

Any small pullback will, in all likelihood, trigger on-limit purchases and the chart pushed back up to 2400 or higher. However, if the pullback is stronger than anticipated (the possible government shutdown crisis and the congressional fight over the continuing resolution that expires on April 28 is a factor), then we could see the chart coming back down to the 1800 level. As we’re on the monthly chart, such a scenario would take one to two years.

The bottom line is that the chart is at a measured high with a doji and significant news on the way. I would hold for a time and see where this leads. A pullback to 1800 would provide a good buy point – but, of course, in maintaining we may miss (and possibly the more probable) further move up.

Slow Trader Diary

Slow Trader fund up this week to + 5%.

To report the fund each week encourages trades to be cashed too early to show a profit. That is silly. Therefore, I propose to provide the fund report, whenever possible, the first Saturday of each month.

The diary of trades taken, wins and loss, and those trades that are on the radar, will be discussed each week as usual.

These are considerations coming up:

Crude oil (WTI)

Snip20151017_8

We have a buy signal on the daily chart shown above. A 60% probability of WTI climbing to $50. After that, the price may descend into a trading range or may continue climbing for a measured move up to about $55. Whether we hold or not at the $50 line will depend on price action and momentum when, and if, we get there. Also, the COT is in our favour for this trade.

Gold

Snip20151017_11

Gold has provided a measured move up, in agreement with the COT. After a breakout on 2nd October, gold is now in a short-term bull trend (a bull channel on the daily chart). It has reached a resistance level, however, and the likelihood is that price will fall back slightly (XAU USD) to $1150. A trading range above its 5-year low? If this happens, we will look for a buying opportunity if price action and the COT agree.

S&P 500

The S&P 500 has broken above the resistance level that we discussed last week. The ratio has now swapped to 60% probability of the price climbing. Indeed, a new high could result in the coming weeks.

This positiveness in the S&P puts a good light on stocks within the index. We will look for opportunities to buy ‘fundamentally’ good stocks as and when they provide price action buy chances.

Slow Trader Diary – week 30

Remember from the last diary that we had missed the swing up (hesitancy over Greece) and that we would not take further trades until the swing was right.

You will also recall that we showed the S&P 500, and broadly where it would drop. Here is the S&P today.

Snip20150726_1

We are not sure as yet how far the S&P will drop. However, we can now look for excellent buy opportunities in the S&P and FTSE companies.

It is, of course, not the case that when an index falls (the S&P above is an index) that each company share associated with the index will fall. But in this case, it was a right decision to wait.

To do otherwise reminds me of the comment “the operation went brilliantly, up until the moment the patient died”. The same is true of trading. How well the trade is going – or how many points up or down –  counts for little until a deal is concluded (sold).

How goes it? Week 25

For simplification, I’ve combined Slow Trader and Ferrari into one fund which we will refer to as Slow Trader Fund.

Our strategy in Slow Trader is to short-term trade (using, primarily, daily close bars rather than intraday bars) shares in the FTSE 350, stocks in the S&P 500 and major foreign exchange (FX) currency pairings.

Arm Holdings. We came out at a little over break even. I moved our stop as I was not happy with the possible trend change of this share price. The share price did run below our buy point but has subsequently moved up again. We are out for the time being.

Halliburton Co. We set this share stop also to a little over break even; this took us out without losing, and the share price has continued to drop. A good move on our part.

BT Group. Moving the stop too early is usually not a good thing. I feel that the stop should move if something happens to make you change your mind about the share or the share price has climbed sufficiently to put you into a different price bracket. I got this wrong with BT. I moved the stop and got stopped out for £17 profit, but the share turned and continued up!

Ashtead Group. – £311 lose. On reflection, not a good share to take. A ranging share price, rather than my strategy of making trending prices, this share dropped well below my entry price – but has subsequently turned up again.

CLS Holdings.  – £325 lose. I made fundamental mistakes with this one. Incorrect retracement level without price action. If I had waited (patience is the virtue of a good trader) and measured the retrace correctly, this could have been a winner.

Snip20150620_7I bought at the red arrow; the green arrow was, of course, the correct buy point.

Card Factory. – £311 lose. A relatively new share. Only five years of fundamental information, I prefer ten years.

Snip20150620_8

We were in credit – having bought at the lower green arrow – but a sharp drop took us out. You will notice that I sell a share for a loss.

FX AUD/USD. + £394. An intraday 4-hour chart so you can see the move.

Snip20150620_9

We bought at the red arrow, we sold at the green arrow, and we bought again (and we are still in) at the blue arrow. Easy! Okay, sometimes it goes ideally like this.

We also had interest charges (mostly for carrying shares over the weekend) of – £32.

We are currently in:

CLS Holdings. We bought again at the green arrow on the CLS chart above. Although the price has moved up, we are still -3.7 points as this is the spread. The spread is how the broker (in our case IG) make their money. It is the same as when you go on holiday and change your sterling for euros; you have a buy and a sell rate.

ITV PLC. + 2.6 points.

Money Supermarket. + 12.1 points.

Monster Beverage. + 568 points.

Underarmour. + 464 points.

WPP PLC. – 9 points.

FX AUS/USD. – 20.9 points.

Finally, anyone wishing to short-term trade for themselves I am trialling a notification system to help you. You will get my information directly to your smartphone.

Shares traded this week

None of our shares reached their price targets this week.

We usually only trade shares long (unlike the FX market which we trade long and short).

The FTSE 350 and S&P 500 markets were generally down this week. Specific sectors like Home Construction had a good week.

However, the general down periods in the market present us with buy signals.

The one I got wrong was Southwestern Energy Co. A higher risk share for us as it was early in an up cycle following a sizeable down period. It retraced more than I wanted.

On the plus side, we entered:

Arm Holdings which we got for a reasonable price and is up a few points.

BT Group, this is a weak growth share but a positive growth none the less. We are at even on this.

Halliburton Co, we had a buy limit set on this company for most of the week. We recently got it, and it immediately moved nicely up. An oil equipment company but very much dependent on the oil commodity price.

Monster Beverage had a good buy signal but has moved lower. We are still in this share although my stop position will not allow it to run much lower. Hopefully, we’ll get an excellent recovery in the market and Monster next week.

Under Armour, Inc. was bought early in the week and stayed low throughout. Yesterday, however, it moved very sharply up in our favour – still some way to go to our sell target.

A reminder not to use this as recommendations as the buy time on most has probably passed. You would end up buying as I’m selling!

You can get early information via WhatsApp – more on this later.

My S&P 500 top buy tips 2015

Again, from Nick’s spreadsheet, I have selected a few S&P 500 shares to buy as part of your go-get-em portion of your money.

Google Inc (either GOOG or GOOGL), Priceline Group Inc, Green Mountain Coffee Roasters Inc, Michael Kors Holdings Ltd, Qualcomm Incorporated.

Based on the company showing above 80% consistency of growth, a present value that Nick has as less than 55% of potential, and no, or insignificant, debt. P/E has to be representative of the companies sector and probably not above 40. There are lots of other criteria, but these cover the main ones.

Based on a medium-term buy signal about to show. Probably within a couple of weeks.

Be aware, however, that you need to understand the company too. Blackberry, for example, would have qualified for a few years in the above category – but at that point, Blackberry also had no future market.