Today's interesting charts
Comment of the Day

November 01 2012

Commentary by David Fuller

Today's interesting charts

David Fuller's view Price action is a fact and it is better for one's portfolio to observe what the market is doing, rather than telling it what to do. The latter is the triumph of ego over common sense.

China's Shanghai Composite (weekly & daily) had another upward dynamic today. The daily chart also shows more and bigger upward than down dynamics over the last two months. This is often the way markets bottom out and the current range is occurring above the psychological 2000 level, near the upper side of its 4Q 2008 to 1Q 2009 base. PER and Yield valuations are at historically attractive levels. A close beneath 2050 would now be required to question medium-term recovery prospects beyond sideways to higher ranging and a sustained break above 2150 would confirm the establishment of a new upward trend.

Hong Kong's Hang Seng Index (weekly & daily) has been leading China's recovery and appears to be consolidating gains near the February high and lateral trading in the 22,000 region. A close beneath 21,300 is now required to indicate an additional reaction before the gradual build-up of underlying support sustains higher levels.

The Euro STOXX 50 Index (weekly & daily) and the Euro STOXX Banks Index (weekly & daily) appear to be consolidating gains since June and July, respectively, with the former occurring just beneath the March high. Closes beneath 2440 for SX5E and 101 for SX7E would be required to indicate a deeper retracement of gains since this year's lows, before the former leads recoveries towards the upper sides of their broad trading bands.

The German DAX Index (weekly & daily) remains relatively steady within a consolidation of its gains since June, which is occurring mostly above the March 2012 high and just beneath the 2011 highs. A close beneath 6900 for more than a day or two would be required to suggest that major resistance remains in this region.

The UK's FTSE 100 Index (weekly & daily) has been broadly confined to a large, choppy trading range since April 2010. Since June the reaction lows have been mostly higher, despite the loss of upside momentum as previous highs in the 6000 region were approached. Potential support and resistance levels can be unreliable in lengthy ranging patterns but a close beneath 5740 would suggest a somewhat larger pullback before previous highs within this broad pattern are further tested.

Greece's ASE Index (weekly & daily) has seen one of the best relative performances, albeit from a very low level, since the early-June trough. This relative outperformance continued up until the recent failed push above 900, a gain of over 93%. Subsequent downward dynamics suggest that this Type-1 spike low, followed by a Type-2 sharp rebound, has now spilled over into what is likely to be a lengthy right-hand base extension phase, as taught at The Chart Seminar. Here is a related article: Greek Stocks Tumble Amid Concerns on Government Stability.

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