Technical Alert : Nasdaq 100 & Dow Jones

Nasdaq 100

Nasdaq100 is testing its 10year highs reached in December 2015 at 4739.
As you can see on the chart , Nasdaq is at overbought level (RSI) that matched in the last 2 years with market tops that were followed by 4 to 20 % decline .

2 scenarios :

  1. 1/  Tests at 4740 fails and due to overbought situation market falls hard – 5 to 10% .
    We will check the daily MACD for reversal confirmation , wichis still bullish at this time . Preferred scenario.
  2. 2/  Tests of 4740 level succeed and one can see a maximum potential of 2% in the short run to test all time highs from March 2000 at 4815+/-.

Dow Jones

Same analysis can be done for the Dow as for SP500 : Key level / previous high lies at 18351 .
The only difference compared to SP500 is that MACD already turned south yesterday and indicates risk of downside.

Technical Alert : SP500

SP500 broke previous all time high earlier this month when breaking the 2135 level . Previous high dated from May 2015 and was « tested » 4 times since then by 20p or less.
The fact that the previous highs were eventually crossed is of significance on a technical point of view. The 2135 previous high will now act as support in the near future.
There are 2 possible scenarios from here :

  1. 1/  As SP500 (like other US indices ) are overbought , one could attend a consolidation around current levels and possibly 1,5% to 2% correction for a retest of 2135. Once overbought situation would be alleviated upside could prevail again for another 4 to 6 % to 2250 -2300.
  2. 2/  SP500 does not hold recent gain and 2135 level is quickly recrossed on the downside (closing basis) ; the early july break
    would be called a « fake break » which historically are very negative patterns in tech analysis. A 5 to 10 % correction minimum would likely follow.

Based on this chart and for the time being long at best and consolidation at worst prevail . 2135 IS KEY LEVEL. You can note on the chart that trend indicator (MACD) is in the process of crossing on the downside.

If we look at measures of investor sentiment (Daily sentiment index – US futures traders ), situation is very extreme
on the positive side with DSI well above 85% which is the highest level in 2 years . Such readings in the past matched with 4% minimum correction within days.

Virtual Portfolio : Apple earnings

Yesterday after session Apple reported earnings of $1.42 compared to estimates of $1.38.
Revenue of $40 billion, Iphone and Ipad sales all beat estimates but those had been lowered in recent weeks .

Sales in China appeared down 33 % in a very tough environnment.

Services revenue continued to increase at $6 Billion up 19%.

For comparison, in Q3 2015 Apple had earnings of $1.85 and revenue of $49.61 billion.

Guidance for Q4 2016 sits in the $45,5 to $47,5 billion.

Tim cook mentionned several long term opportunities as Carplay, « augmented reality », artificial intelligence , Apple Tv upgrades, …

which might explain the stock was up around 5% to nearly 102 USD after session.

Past growth for Apple seems to be over but company still has a bright future and stock looks fairly valued .

Technically there are lots of hurdles for the stock on the upside with June and July tops at USD 102 -103 , 200 days MA at USD103 and the 1 year declining trend line that lies at around USD 104. Strong supports in the USD 89 – 90 should prevent stock to trade below these levels in the near future.

We keep Apple in portfolio.

Apple chart

 

Virtual portfolio update + Short oil trade

Take profit @ 44,50 on our short oil position has been triggered with a 9,35% profit in 6 weeks.

WTI oil trades now at levels that acted as important support ( see blue arrows on below chart) in the last
18 months ie 42,5 to 44 usd . Bottom of chart shows MACD being negative (Trigger of our trade see June 6th email)
with no reversal in view might be a sign of further downside. 200 MA at around 41 USD is also a support level.

Should the 41-42 USD levels be broken (closing basis), this would open the way to 35 USD and potentially lower levels .

We remain neutral as long as 1/ MACD crosses higher —> Long
or 2/ Break 41-42 USD down —> Short .

WTI Oil Chart

 

 

 

 

Virtual Portfolio Update : July 19, 2016

With the SP500 breaking its all time high at 2134 last week , our 10% stop on our Proshares SP500 ultrashort was triggered at 16,92USD .

Our portfolio still has a strong advance of nearly 4% on a 6 months period compared to our benchmarks : +10% vs + 6,10 %. The MSCI World index performed +2,47% since Dec 31st 2015.

We keep a strong cash position above 50% and so a very cautious stance, even tough we are conscious that after recent
break of all time high on Dow and SP500, potential upside (5%?) still exist from here . We believe that risk is currently badly priced in equities markets and that downside risk far exceeds upside potential so we are not keen to risk capital for additional 1, 2 or 5 % upside.
We are ok to buy “specific » situations ( like Twitter and 30% + profit in 2 months) but we do not « buy the market » at current levels.

For those who are equities overweighted , we will inform you later this week on how to put in place a hedging srategy depending on market conditions.

Virtual Pf 190716

Relief rally after Brexit is fading.

Last week rally is likely to fail again near resistance at above 2100 for SP500 and 9800 -10000 for the German Dax .
Short term indicators ( MACD 4 Hrs ) have already reversed to the downside while daily ones never crossed on the upside …

… ACTION :

We take profit on DAX and Italy positions we took near bottoms just after Brexit a few days ago .
We book small prodits of 3 to 6%.

The Put SP 500 Exercise 2150 matured on June 30th with a value of 0,77 EUR ( Based on SP 500 at 2065)
An alternative will shortly replace this closed position