Strategy Centre

Analysis & Views

Stock markets hit important longer-term support levels – can we recover from here?

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I don’t need to go into an explanation of how stock markets have suffered a serious setback in the past few weeks. But I am going to focus on some important support levels and targets that have been hit over the past 24 hours. I do think there is a very good chance that this leg of the new bear trend could be ending and we could experience quite a strong bounce into the end of October. To explain further let’s examine some of the evidence on the charts. Below is a weekly chart of the Emini S&P. The pink upward-sloping trendline is plotted from a low back in July 2011 and therefore marks a significantly long-term trend dating back over three years. So definitely worth paying attention to. As you can see so far it has held with a very strong bounce almost exactly off this point yesterday on Wednesday 15 October. This trendline is around the 1822 area and we also have important support from mid-April lows at 1807/1803. A break below this area would suggest I am wrong and that this stock market would then be likely…

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FTSE 100: one bad month does not end a four-year bull market

Written by admin

steve w background

The problem with the indices right now is that they are over-invested and over-exposed. With ultra-low interest rates comes an ultra-low incentive to put money in the bank. As 1% of the world’s population now owns 50% of the wealth where does all this money go? With indices and top blue-chip companies offering massive dividends and holding huge cash reserves, it’s not hard to see why the wealthy elite would rather put their money in Google than, say, Greek debt. The problem with the old investment model of a ‘balanced portfolio’ is that, without appropriate interest rates, steady bond prices and stability, that traditional model does not work. Ultra-wealthy people are not looking for massive returns; they are rich enough. When we see stock corrections this is not the retail market. This is institutions and large investors taking profit at the top. When large investors sell the moves are huge, over-exaggerated, a ‘flash-style crash’. This is sheer volume, not necessarily fear or panic-selling. The press love to attribute news to big moves. Russia, Ebola, QE ending… these are all known and have been for months. Technical selling accounts for 80%…

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