Market Report - the Bull Moves Higher
Last time I wrote, the Dow (INDEXDJX:.DJI) was at 10624 and the FTSE100 (INDEXFTSE:.FTSE) at 5625. I was emphatic in my view about the markets overall, saying that "The evidence from the stockmarkets remains compelling - this is still a bull market". In the four weeks since, the Dow has climbed to 10997, and FTSE to 5770. We've had a small correction on FTSE which I mentioned was quite likely in my last report, and the steady rate of progress, rather than a fast move, means that neither index is overbought at the moment. This means that a continuation of these trends is highly likely.
I also mentioned last time that the FT30 and FTSE250 indices had broken up out of multi-month ranges - a very bullish development not just for those particular indices, but also for the main indices, and both have moved significantly higher as well.
£/$ currently stands at 1.536, and looks like it could go higher in the short-term. E/$ is at 1.35 but did not rally from 137.6 last time as I thought.
Of the various charts, I'd say the currencies are the least interesting at the moment.
However, the Gold chart now looks very interesting. In the last report it stood at $1102 and I explained that it was rangebound. I then went on to say that "I would confidently expect that this will ultimately produce an upward break at some point". Gold now stands at $1161, and it looks like the second stage of this bull market is under way.
Also interesting is the oil chart, currently at $84.9 (West Texas) as this has now resumed the uptrend. There's no resistance on the chart until $100, and even then it's not a major level.
As you know, normally I just make my forecasts based on technical analysis. However, by the time my next report comes out, we will have had the General Election. My feeling is that the Conservatives have a bigger lead than the polls are showing because people sometimes don't like to admit they vote Tory. We saw this in the 1992 election. Historically, a Conservative government is good for the stockmarket, and I think we'll see the bull market continue on the back of a change in No.10.
(c) Robert Newgrosh 2010
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16 comments
Robert,
Tell me what will happen to the FTSE in the next 6 months. Forget 2012 for now.....Coz I also predict by 2030 the FTSE will be higher then it is today....
Read my latest report out today.
Well you did ask when I thought it would get to 10,000.
Robert,
I fully understand what you are saying. But the point I am making is no one knows whether the FTSE is going to go above 6900 and in what time period. Therefore until such event occurs I don't think there is much point talking about 10,000 FTSE.
I fully agree if the FTSE can make a new all time high then the markets will go higher but I have no idea how high where as you claim that it will be 10,000.
How did you come to your number?
Also your point about the markets if and then etc it is a bit like me saying if the markets make a new low then it is likely to make further new lows.
But what value does that add in terms of working out where the markets will go next week or next month? None until the intiail event occurs.
Coppock may indicate when a bull market starts but you did'nt tell us how long the bull market will last. Bull markets can last from a few weeks to a few months to a few years. No one knows how much longer the current one will last.....
We have gone up without a decent correction since last March and there is'nt much money from institutions/Investors left on the sides to prop the markets up further and we are heading for the summer which is one of the quietest periods.
However If the markets do correct 15-20% then I would expect the markets to go higher as the Fed will pump more money in.
Isaac
It might help if you read my earlier reports on this site as they provide many of the answers to the questions you are asking. If FTSE breaks the previous all-time high of 6900, then in the absence of any technical resistance, the next resistance is likely to be psychological, i.e. 10,000. We saw this on the Dow when it approached that level for the first time. Likewise, I have said in previous reports that the 10,000 target will be reached by the end of 2012.
No method will allow you to predict every discreet time period, i.e. where will the market be tomorrow, next week, next month? Fortunately, to make money, you don't need to.
If you identify a bull market, then the chances are that over any reasonable timeframe, the market will go higher.
Isaac if you can get hold of a copy of this weeks Investors Chronicle it contains a feature article on The Coppock Curve.......
There is an excellent "rule of thumb" which allowed me to make a very good call on the Dow in 2006/07 worth 3000 points (11,000-14,000) which is that one all-time high leads to another and another (because there is no resistance). So yes, if the market goes higher than 6900 and makes a new all-time high, the odds are that it will continue higher.
You absolutely have to say IF this, THEN that. It is a basic TA concept that if you break a key level you change the supply/demand relationship and more importantly you alter sentiment & psychology. You simply can not ignore it.
Coppock is a medium-term weighted rate of change indicator. It signals the start of bull markets. As I said, it has a fantastic track record, and we had a signal on 15 May 2009 on the UK market.
Roberrt
So your arguement for 10,000 on the FTSE is if the Market can go higher from current levels and break 6900 then it will continue to go higher to the extent of 10,000.
Essentially what you are saying is if the market moves higher then it will continue to move higher. OK.
Without saying if x happens then y will happen, based on what is already known without any further events occuring where do you see the FTSE going over the next 1-2 years?
Can you expand on your analysis on the Coppock indicator and perhaps give us more detail on how you have used this methodology to come to your conclusion?
Robert,
One your website you have stated a forecast of 10,000 for the FTSE by 2012. Can you please share your thoughts, reasoning and analysis on your prediction with fellow readers on this board ?
Do I think that is impossible? No. With very high inflation levels I think it is a distinct possiblity, but I don't expect the current instrinsic value of the market to double in the same time period.
Isaac, I've based it largely on the extent of previous bull markets which were signalled by Coppock. So really I'm not making an outlandish forecast, I'm just using precedent. Coppock has a fantastic track record - only one false signal in the last 40 years on the UK market.
Also I think that if FTSE can get through resistance at 6700, and then the all-time high of 6900, after that there will be no resistance in the way and the index can easily move up to the psychologically important 10,000 level.
This might help make the 10,000 target look more "reasonable". Do you think FTSE can clear 6900? If you do, then you have to say there's a good chance it's on it's way to 10,000.
I would also really appreciate it if you can please discuss some of your worst calls in the market. How you came about making them and why and what did you learn from your experience?
What impact has bad calls had on you and your use of technical analysis?
When you express a view on a market how confident are you that you are correct from a % perspctive?
Hi Robert,
Thanks for taking the time to express your thoughts. I would be interested to know your opinion on the following :
- Where will the FTSE ultimately top out? Is your analysis purely based on price or do you look at time patterns?
- What is your short/med/long term view on £/$ ? At what point do you think we will see £=2$ again? Where do you think £/$ will peak before £ starts to drop again? Which currency do you think is the strongest from £,$ or Euro?
-From a technical perspective which sector do you think will be the best performing in the next 1-2 years?
-Where do you see Oil prices go by year end and Dec2011?
-How do you make your decision as to what point you should sell out stocks/trading position? What do you look for to determine whether you have caught most of the move?
Thanks!
I will be very happy to answer your questions about my methods, or technical analysis in general.