These could be leading elements of weakness among stock indices. Likely softening due to profit taking since they are not anywhere near to sweet spot that would entice sellers to come in.
6 charts of index losers
In this chart, FTSE, DAX and NASDAQ ‘dive’ despite still positive year to date. Early June appears to be turning point. Note charts #1-6 were captured on 04 July 2017. Chart #7 Hang Seng is fresh.
Chart #1 Nasdaq FTSE and DAX weakness
Using a 12-month ema as a really simple trend filter, the current weakness is from the technical point of view, probably some kind of profit taking at high. We are nowhere near to a ‘sweet spot’ that would entice bears to go short. Sweet spot: when price falls below filter, support becomes resistance. When global markets tanked on August 24 2015 ‘Black Monday’ and again on the first day of trading last year, indices were sitting on such a ‘sweet spot’.
Chart #2 DE30 (DAX) monthly chart 2010 – present
Chart #3 UK100 (FTSE) monthly chart 2010 to present
SiMSCI (Singapore index futures) was a leading loser in 2015 when it crossed it’s own 12-mth ema in May.
Chart #4 SiMSCI daily chart 2010 – present
3 compelling setups on day charts
However there are some setups that are very compelling.
STI and SiMSCI have been consolidating since the past 7-8 weeks. This is STI chart captured on Tuesday. In this kind of consolidation, it’s hard to know whether price will break up or down but always I am looking for market to go ‘BOOM’ when it does break in any direction.
Chart #5 STI daily chart Apr 2017 – present
This daily chart of DAX is interesting. We can see that DAX has closed each month positive since January. However the positive month-end closing sequence was terminated at end of June with the negative close.
In addition, there was a 8-week consolidation but that was broken on the bearish side with a huge expansion out of the channel. Any guess if we might be seeing the start of a new trend?
Chart #6 DE30 (DAX) daily chart Jan 2017 – present
Finally this chart of Hang Seng Index. HSI shows a trend of rising months from January to June. This trend was terminated early this week when the index expanded to the downside by breaking June low. Todays black candle (not closed yet) could be part of pullback/looking-for-resistance price action unfolding. See see how.
Chart #7 HSI Daily chart Dec 2016 – present | Source: Tradingview
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
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"I do not have a financial advisor's license. I am not qualified by any regulator to give financial advice. I do not know you the reader. Your investment means and motive may be different from me. My posts here are based on observations and meant for education. I am not responsible for for any consequence from your actions."