FTSE update.

September 15, 2010September 15, 2010 Hamilton

I am using the FTSE as the best proxy for all the markets. It takes, sort of, the middle position and is easily labeled. The chart on the left (click to enlarge) is from June 20th, so about 2 months ago. The preferred count at that time was that the entire drop into the low was a single wave! The “logical” argument for that was that the low corresponded perfectly with the low called for by the preceding “expanding diagonal triangle”, at about 4800. From that point an a-b-c should be expected (as already labeled in the alternative). Normally one would expect the a-b-c to retrace about 61% on average, so , given the 1000 point drop that would take the FTSE to about 4800 + 0.61x 1000 = (about) 5400. We are presently about 160 points above this level but a retracement of 76% or even more of a wave one (of 3 of C) is certainly not unusual, which is where we are right now!

Compared to the TSE(see previous blog below), which is more “compressed” in its structure having probable traced out a wedge type 2 wave one, and compared to the S&P where either a wedge or a simple 5-wave move is possible depending on how you label the subdivisions(see blog on June 20th), the FTSE is the clearest and easiest to read. All have the same message and that is that soon , if not now, the counter-trend of the last two months must stop, otherwise these scenarios are negated!

DAX and FTSE

July 21, 2010 Hamilton

To elaborate (or add to the confusion) on the earlier S&P analysis here are both the DAX and the FTSE. Generally the FTSE , being English , correlates best with North American markets.

Both market have the same pattern as the SPX leading into this latest down trend (an expanding wedge). Thereafter the similarities stop. The FTSE does precisely what it should do, which is retrace the entire territory of the wedge, pretty well precisely (the only one to do so). The DAX, on the other hand, does nothing of the sort, in fact after the flash crash it manages to double top (the tops in April and June are for all intents and purposes at the same level). The FTSE probable corresponds best with the red count on the S&P. If so both the FTSE and the DAX should have a big move soon. The DAX which is most confusing is about to complete a triangulation that has been going on for either 2 or 4 months depending how the triangle is drawn. If it is in fact a triangle it normally goes UP in a thrust, if it is not – that is if the triangle is in fact a series of 1-2s of different degrees (3 of them) it should go DOWN hard to at least reach the base of the wedge. All told , looking at all three, down is more probable!

You can click on the charts to enlarge and move them around. I have add the SPX chart below for completeness.

TSE, DAX, FTSE and S&P

June 17, 2010June 17, 2010 Hamilton

Stock markets are behaving in rather strange ways lately, volatility is rather high with about 14 days with more than 90% up or down days over the last two months. Normally there are only 2 such days in an entire year. Only a month ago we had the flash crash and I understand that something like 70% of all trades in the S&P are now of the “frequent trading “ variety which essentially means that they are computer driven and almost always geared to momentum that is to say, mindless monkey do as monkey sees type of stuff. Very frustrating for both bears and bulls. Furthermore just a few days ago we were at levels fist reached back in September or October last year , meaning that we accomplished nothing for almost an entire year.

From an EW point of view things are not that much better. In both the S&P and the FTSE a clear 5 wave down can be seen followed by an equally clear counter-trend a-b-c. This very strongly suggests that the large down-leg anticipated has actually started. The TSE does not show the 5-waves down but the start could have been a “diagonal” type 2 (the only impulsive structure that allows overlap). The DAX, to be bearish, must have been a 1-2, 1-2 sequence but the percentage of the retracements is approaching levels that make this scenario less likely by the minute.

For the moment stand aside until things get clearer. Here are the charts;

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