Long Summer Into September
09/20/2006
As I write I am Chennai airport about to fly to Hydrebad. I am here to see some of the latest business ideas in IT. The centre of global capitalism has shifted East, but as one entrepreneur pointed out to me today, the home of financial markets remains the UK.
On ADVFN's charting, looking at the FTSE 100, it is difficult to see anything but weakness for the weak ahead. When you add in short-term indicators like the MACD (moving average convergence) a key market weakness warning comes when the market does not make new relative price highs as the MACD does. That is happening. The 6,100 levels looks a bit off in the next fortnight to month as things stand.
Examining just one of the better performers over the past week, we have Drax Group. The company has had a couple of falls and trying to make good a recovery. It is classic case, which you can view on ADVFN, of a stock which rising in a downtrend, as opposed to having fallen in an uptrend and about to resume upwards more permanently. How do we know this? Because its rises remain below the downtrend which began in August with a price peak and which is unbroken by the recent rises.
The UK stocks showing the strongest short term bullish momentum are: PipeHawk, Christie Group, IndigoVision, is on the list too of course.
(Email me if you would like the presentation on the stocks I like for 2006, which I broadcast on BBC2 - the picks in the past two years produced a 83% compound return.)
Value-Growth
For a 12 month outlook, I look for stocks based on company growth criteria (eg revenue and profit growth) and on valuation criteria that I have developed over the years (incorporating price earnings growth). I then datamine for outstanding names. Currently on my radar are: Lookers, NWF, SHL Group and UCM Group.
Remember I am targeting about 20-25% with the value growth criteria. Last year it produced 33% return.
On my momentum value search for stocks based on momentum (eg price moves over the 2 week and 6 month periods) as well as valuation criteria (such as price to earnings growth, dividend yields), names showing up there include: Asfare Group, Jourdan, Touchstone Group.
Crazy Small Stock
These are high risk volatile stocks which could move sharply higher or move sharply lower in my radar are: Tex Holdings, Abbeycrest, Austin Reed Group.
Also, if you would like a free multi-media CDROM on 'Investing Better' for ADVFN readers, which covers spreadbetting, CFD trading and momentum indicators like the MACD, posted to you then drop me an email with your postal address to alpesh.patel@tradermind.com.
Spreadbetters
Spreadbetters and futures traders often look at hard and soft commodities. Here's my quick take on the action for the week ahead:
- Oil: Sideways
- Copper: Sideways
- Gold: Down
- £/$: Down possible sideways
- Dow: Up
- FTSE 100: Down
- Soyabean Oil: Down
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