Donoghue Technical Analysis

Bearish Rising Wedge in the Paris CAC40

2012-02-08T02:44:00.000-08:00

Click on chart for larger image

The Paris Stock Exchange CAC 40 Index closed on Tuesday 7th February 2012 at 3411.54.

A Rising Wedge, such as the one depicted above, often signals that a reversal in the direction of prices is in the offing. Since prices have been rising that means that they may soon be falling.

The wedge in the chart above has for its boundaries the rising and converging blue lines.

If prices rise above the upper boundary line then the wedge pattern will vanish and indicate that another pattern is unfolding. In that case the following forecast would be revised.

But if prices begin to fall below or out of the lower boundary line, then prices will most likely fall back to at least the 2950 level.

Note the deplorable state of the descending 150 day SMA (Simple Moving Average) in red. Also, the same situation holds for the 200 day SMA in yellow.

The rising 50 day SMA in green might bring a smile to the faces of the bulls. But I wouldn’t put too much faith in it – especially at this moment in market history.

The entire upward thrust from the low of 2693.21 on Sept 23^rd 2011 is countertrend to the greater down trend which began at least on July 7^th 2011 at the high of 4020.33.

Good luck, Bonne chance to one and all

James Leo Donoghue

in Sydney, Australia

Tin: drastic drop of $7,901.00 per tonne predicted

2011-08-10T06:21:00.000-07:00

Click on chart for larger image

Tin closed on Monday 8^th August 2011 at $23,775.00 per tonne, which is the latest data available for my download this evening of Wednesday 10^th August 2011.

The Head and Shoulder measurement formula (vertical red lines on chart) suggests a minimum price drop of $7,901.00 per tonne to a target price of $15,874.00 per tonne over the next several weeks, possibly months. The plunge might take a year or more to eventuate. However, in the volatile times we are living through I wouldn’t bet on it. I would not like to be long tin.

The $15,874 level is a minimum expectation for this commodity. If tin visits this price region I would expect:

(1) a few minor relief bear market rallies on its way down

(2) a fairly major countertrend rally once it arrives in the region of $15,874.00

(3) then a continuation down after the fairly major countertrend rally, but more on this point if and when this forecast proves itself.

As I always emphasize: Technical Analysis is a fascinating subject, but never forget it makes for probabilistic forecasting; the crystal ball is too often cloudy.

A clear Head and Shoulder pattern such as the one depicted in the above chart deserves attention. Why? Have a look at my previous posts:

Tuesday, September 23, 2008

A bear is a bear is a bear, even in Paris: c'est un ours!
Wednesday, September 17, 2008
FTSE 100, Global Pain, More to Come.

Wednesday, March 4, 2009

Bull’s-eye forecast for London’s FTSE 100 Index

Thursday, February 26, 2009
Bull’s-eye forecast for The Paris Bourse CAC 40 Index

Good luck to all with tin or with any other market, long, short or out.

NOTE: We no longer offer forecasts for sale.

James Leo Donoghue

In Sydney,

Australia

Wednesday 10^th August 2011, 10:30 PM.

Hang Seng says get out? Update 1.

2010-01-23T20:05:00.000-08:00

Click on chart for larger image

For the sake of clarity, here is the writing on the above Charts, followed by the Forecast:

CHART 2 (daily)

-------------------

The 150 day SMA (Simple Moving Average) is red in colour.

It is significant that:

(1) the price has closed beneath this SMA and the 50 day SMA (in green) which has lost momentum and is moving sideways

(2) the price not only broke down through the Neckline (in orange) on Friday Jan 22, 2010 but it gapped down in the form of a Breakaway Gap.

CHART 1 (weekly)

---------------------

To give perspective, here is a weekly chart of the Hang Seng Index from end of June, 2000 to Jan 22, 2010

The 30 week SMA (Simple Moving Average) is brown in colour.

It is significant that:

(1) the price has closed beneath this SMA

(2) the price has broken down through the Uptrend line (in blue) which is drawn from when the Great Bear Market Rally began - in March, 2009.

(3) the price has broken down through the Neckline (in orange) of the recent Head & Shoulders . When an H&S pattern appears at this point in a Primary Wave Up it often signals that a Reversal of Trend is likely. It is essential to keep in mind the probabilistic nature of Market Forecasting.

The Forecast:

----------------

The following Forecast will become more firm if/when the Hang Seng closes 3% beneath the point where it broke down through the Neckline of the H&S Pattern.

That is, the Neckline was at approximately 20,830 on Friday January 22, 2010 when the price went to a Low of 20,250 and a Close at 20,726.

So I am looking for (and expecting soon) a Close of at least 20,204.

Once this occurs then the following will likely happen:

(1) There will be a Pullback Rally where the price climbs back towards the neckline. Short sports will be waiting for this.

(2) The Measurement Formula of the H&S pattern indicates that the Hang Seng will fall at least 948 to a minimum of 18,778. See the red vertical lines on the charts above.

(3) Once the Index lands in the area of 18,778 it will most likely bounce up before commencing a frightening plunge. This decline will most likely take the form of a series of ever lower highs and lower lows. The Bear won't be satisfied until he has broken just about all the market players. .

This would be similar to the way the Dow Jones Industrial Average fell after its initial October 1929 collapse and countertrend Bear Market Rally (a rally that lasted 5 months). What came after that 5 month long Bear Market Rally did not hit bottom till July 8, 1932 - two years later. Those two years were the first 2 years of the Great Depression.

One of my favourite books is Reminiscences Of A Stock Operator By Edwin Lefevre, Copyright (c) 1923 by George H. Doran Company ISBN: 0-934380-11-2. It is dedicated to Jesse Lauriston Livermore, the gentleman some officials tried to blame for the Great Crash of 1929. As Edward D. Dobson writes in the Introduction to the Traders Press edition of 1985, the one I possess: "Note that this work of fiction is in fact a thinly disguised biography of the most colorful market speculator in the stock and commodity trader's Hall of Fame, Jesse Livermore."

In the book, in Chapter VIII, page 89, the "fictional" trader declares: "The analysis of the week that had passed was less important to me than the forecast of the weeks that were to come."

I like that.

Good luck to all of us.

James Leo Donoghue in Australia, Sunday 24th January 2010 8:30 PM

leo_donoghue@yahoo.com.au

Hang Seng says get out?

2010-01-14T03:53:00.001-08:00

Click on chart for larger image

If the Hang Seng Index breaks below 21,030 by at east 3% it will most likely signal the beginning of the end of the Bear Market Rally which commenced last March, 2009.

The countertrend rally from March appears to be building a Head and Shoulders pattern of late.

If it breaks below the Neckline indicated by the red arrow, then a small Pullback rally should eventuate, after which - watch out below.

The H&S pattern may not be completed, of course. However some traders would have started selling - just in case - after January 11th 2010 when the price failed to push above the upper orange line connecting the two upper Shoulder tops.

Caution is certainly on the cards.

James Leo Donoghue

The XOM bomb? Caution is called for.

2009-07-27T22:19:00.001-07:00

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Exxon Mobil, NYSE:XOM, trades on the New York Stock Exchange. Its closing price (Monday 27 July 2009) was $72.75.

I believe it would be wise to be cautious going into further long positions for the time being. XOM may be completing a fourth wave (at letter E in the chart above). Note the appalling state of the 30 week simple moving average.

This may well be an outstanding example of the ending of the global bear market rally which started last March. The rally has been so strong that I think it might surprise on the upside in the near term. But I would advise getting ready for a reversal.

If XOM's price begins to drop, there is a distinct possibility it will travel to the $52.00 region which would be about the midpoint of the downward sloping channel marked on the chart.

XOM's price may well take a breather at the $52.00 mark to gather steam, and then head on down to the $40.00 and below area.

All the best to one and all!

James Leo Donoghue
leo_donoghue@yahoo.com.au

Shanghai: aching for a correction?

2009-07-27T19:24:00.000-07:00

China's Shanghai Composite Index (see link below) is overextended and aching for a severe correction. If I'm mistaken I'll wear egg on my face for awhile.

As the link below is not a static picture you'll have to look back to this posting date (July 28, 2009) to see if the 3430 area was indeed in this market's reversal area.

I expect Shanghai to reverse in the next few weeks or sooner and go down from its current 3430 area to a first support level at about 2500, then bounce up, and then head south again to the 2100 level, for a total correction of about 1,300 points.

Shanghai's Bear Market Rally appears to be caught up in a frenzy fueled by outrageous optimism.

Here's a link to the chart:

http://finance.yahoo.com/q/bc?s=000001.SS&t=2y&l=on&z=m&q=l&c=

But, hey! I could be wrong. So here's an opposite view by Ee Chee Koon, chief operating officer at Singapore-based Asia Charts, who says, “Though the Shanghai Composite Index has been charging up, there is little sign that the trend is coming to an end.”

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajTh.rURymTs

Let's face it: what the world needs now is a flawless crystal ball.

All the best to one and all!

James Leo Donoghue
leo_donoghue@yahoo.com.au

Alert: Wal-Mart may soon be trading at $40.00

2009-07-14T05:08:00.000-07:00

Click on chart for larger image

Wal-Mart Stores trades on the New York Stock Exchange and is looking poorly.

With the return of so much dangerous exuberance on global stock market exchanges during the bear market rally which commenced last March I will not be surprised if WMT trades higher to about the $50 mark over the next few days to the upper limit of the deadly down channel it is in.

Egg on the face time? Perhaps.

WMT closed yesterday (Monday 13th July 2009) at $47.83. Trading in New York will commence in one hour's time (Tuesday 14th July 2009).

Over the next several days/weeks I expect this stock will be trading at a minimum of $40.94.

Here's a link to watch the progress of Wal-Mart:

http://finance.yahoo.com/q/bc?s=WMT&t=1y&l=on&z=m&q=l&c=

James Leo Donoghue
leo_donoghue@yahoo.com.au

Bull’s-eye forecast for London’s FTSE 100 Index

2009-03-04T01:53:00.000-08:00

Click on charts for larger images

The London Stock Exchange FTSE 100 Index closed on Monday 15th September 2008 at 5204.20 (first chart above).

The forecast then was that it would drop more than 1600 points to a minimum level of 3600. It has now done this (second chart above).

To see the comments and forecast of 17th Sept 2008 for The FTSE 100 Index click on the following link to the appropriate Blog Archive:

http://donoghuecomputersystems.blogspot.com/2008/09/ftse-100-global-pain-more-to-come.html

As you can see from the latest chart above, the London FTSE 100 closed yesterday 3rd March 2009 at 3512.09.

Note that the forecast drop from the Head and Shoulders pattern was a minimum target.

James Leo Donoghue

leo_donoghue@yahoo.com.au

Bull’s-eye forecast for The Paris Bourse CAC 40 Index

2009-02-26T03:49:00.001-08:00

Click on charts for larger images

On 23 September 2008 the Paris CAC 40 Index was at 4223 (first chart above). The forecast was that it would drop more than 1500 points to a minimum level of 2700. It has now done this (second chart above).

To see the comments and forecast of 23 Sept 2008 for The Paris Bourse CAC 40 Index click on the following link to the appropriate Blog Archive:

http://donoghuecomputersystems.blogspot.com/2008/09/bear-is-bear-is-bear-even-in-paris-cest.html

As you can see from the latest chart above, the CAC 40 closed yesterday 25 Feb 2009 at 2696.92.

Note that the forecast drop from the Head and Shoulders pattern was a minimum target.

James Leo Donoghue

“People want a return of their capital, not on their capital.”

2009-02-10T19:06:00.000-08:00

A great quote by Natixis Bleichroeder technical analyst John Roque. I've found myself uttering these very words.

The video is almost as good as THE DAILYSHOW with Jon Stewart.

The quote comes where the host says “Onto fixed income we go”, and Roque says “Okay, it’s curious to me how everybody keeps telling me we’re not Japan. Well, if we’re not Japan why does the 30 year treasury bond continue to look so bullish? It’s really the only asset out there that continues to rally.” It’s at about 3:30/5:18 on the video.

http://www.cnbc.com/id/28001156/?__source=yahoo%7Cheadline%7Cquote%7Ctext%7C&par=yahoo

Wow, these guys talk fast, don’t they?

“He’s not a Hoya?”

If you’re like me and wondered what is a Hoya go to
http://www.thehoya.com/whatisahoya

Roque is certainly right when he says: “The trend is down.”

Good luck to all!

James Leo Donoghue

South Korea, please free Park Dae-sung immediately

2009-01-21T03:18:00.000-08:00

I was astonished to read today that the South Korean government has arrested 31-year-old Park Dae-sung, blogger, because his economic forecasts have been so accurate.

Apparently his specific predictions of such events as the collapse of US Investment Bank Lehman Brothers and the decline of the South Korean currency has outraged the powers that be.

They accuse him of other ridiculous-sounding things, as well. It looks to me to be simply an attack on free speech in South Korea. But here’s the article I read, from the BBC International web site:

http://news.bbc.co.uk/2/hi/business/7839375.stm

By the way, I glanced at the Korean Composite Stock Price Index (the KOSPI) just moments ago. It’s the main tracking index for the 200 largest, most liquid issues traded in South Korea:

http://finance.yahoo.com/q/ta?s=%5EKS11&t=5y&l=on&z=m&q=l&p=&a=&c=

This Index is sick. It is extremely likely that the KOSPI will shortly end its sideways corrective phase (which began in late October, 2008) and be followed by a plunge that will shake Korean investors.

I suggest that the government of South Korea free Park Dae-sung immediately so that he can carry on his vital work of forecasting.

What do you think? Is the arrest of Park Dae-sung outrageous? What can we do about it? The final two lines of the BBC article sickened me:

“Park Dae-sung has now been denied bail and is awaiting trial.
If convicted, he could face up to five years in jail.”

Your ideas and comments are welcome.

James Leo Donoghue

Bull’s-eye forecast for ASX:TSE - Transfield Services

2008-12-01T02:49:00.000-08:00

Click on chart for larger image

To see the forecast of 30th September 2008 for Transfield Services Ordinary (ASX:TSE) click on the following link to the appropriate Blog Archive.

http://donoghuecomputersystems.blogspot.com/2008/09/transfield-services-watch-out-below.html

TSE was then at $7.59 and the forecast was that it would drop to a minimum price of about $2.50, a drop of over $5.00.

As you can see from the latest chart above, TSE closed today Monday 1st December, 2008 at $1.24.

In the two months since my forecast this issue has dropped $6.35. That’s a drop of more than 83%.

The highest price TSE achieved during the formation of the Head portion of the H&S pattern was $16.32 on 30th October 2007. From that High to today’s Close this issue has suffered a decline of $15.08 – a massive 92% loss in value.

Note that the forecast drop from the Head and Shoulders pattern was a minimum target.

Good luck to one and all.

James Leo Donoghue

If you wish to use any of this material in your publication please contact the writer:

Phone: Sydney (02) 9453 9174
Mobile: 0410 570 394
Permission will be granted by e-mail

Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$35.00 (incl GST).

Or get a monthly update for 1 year for only Aus$150.00 (incl GST).

Contact us at DonoghueTechnicalAnalysis.gmail.com

AWC Alumina Limited - is its price still flagging?

2008-11-15T03:26:00.000-08:00

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ASX:AWC Alumina Limited Ordinary closed yesterday in Australia on Friday 14th November 2008 at $1.36

Not that long ago - on 13th July 2007 - AWC hit a high of $8.35. If the investor or trader who paid that price still holds those shares today he or she must surely be feeling severely disappointed. Perhaps angry is a better word; after all, that’s a loss of $6.99 per share, or a loss of slightly more than 83%.

For believers in the idea of “buy and hold, no matter what” (and there are many) these must be trying times indeed. Even those who invest according to the tenets of Dow Theory would have had to exit this stock long ago.

AWC’s fall is just one example of the staggering depreciation in value that has flattened countless issues listed on stock exchanges throughout the Global Village.

Would that the pain for holders of AWC were over!

Sadly, the technical analysis pattern that has recently been completed on AWC’s chart – the Flag – generally indicates more bad news ahead. As one might expect, the Flag pattern appears on a mast.

In a Bear Market one must imagine the mast with the flag at its peak as an upside down image. The mast is the downward moving price plot, and I’m sure you can see why this recent area of price fluctuations or congestion – or price consolidation – is referred to as a Flag. Let us take the August 12th 2008 closing price of $4.66 as the beginning of the flag pole or mast. So its peak (upside down, of course) would be the October 17th 2008 close of $1.86. That’s a drop of $2.80.

Sadly for holders of AWC, Flags are not Reversal Patterns. So it would be futile to expect the price to suddenly start climbing, though miracles do happen. Flags are pauses in the prevailing trend, and the prevailing trend here is downwards. Flags generally require from about one to three weeks to develop.

A look at the Volume tells a story of many holders bailing out of this issue, more easily seen on the weekly chart (not shown).

When the price breaks out of the Flag formation it will often travel the same distance that it has already travelled. Obviously, since it closed at $1.36 on Friday it cannot possibly go down another $6.99 or even the $2.80 discussed above.

But I fear this price is going to drop further. Its drop just may be halted at the lower trend line shown, though I will be surprised if this happens.

Alumina Limited (AWC) is involved in the mining, refining and smelting of aluminium. The Price chart of Aluminium displayed above shows graphically what has been happening to the price of this commodity. Like most commodities – tin, zinc, silver, etc. - it has not been doing well at all.

Good luck to one and all.

James Leo Donoghue

If you wish to use any of this material in your publication please contact the writer:

Phone: Sydney (02) 9453 9174
Mobile: 0410 570 394
Permission will be granted by e-mail

Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$35.00 (incl GST).

Or get a monthly update for 1 year for only Aus$150.00 (incl GST).Contact us at
DonoghueTechnicalAnalysis.gmail.com

Centennial Coal - going down in flames?

2008-11-13T04:54:00.000-08:00

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ASX:CEY Centennial Coal Ordinary closed today in Australia, Thursday 13th November 2008, at $2.69

The Head and Shoulder measurement formula (vertical red lines on chart) suggests a minimum price target of $1.29 over the next days or weeks. It could take months, but I doubt this because the current downward thrust is gaining force so rapidly. Also, it has already completed its pullback to the neckline and has now resumed its downward push.

The $1.29 forecast level is a minimum expectation. On the way down to this price level expect some counter moves upwards.

Readers of this blog will have undoubtedly noted the significant number of Head and Shoulders patterns appearing in these posts.

I consider the H&S pattern the most significant pattern in technical analysis, and when it appears – especially in abundance on the charts of so many issues – I give it great respect. It is a pattern, when correctly identified, which has considerable predictive value. Many issues which are the components of global stock markets have been producing this foreboding pattern.

This was also the case in the 1929-1932 Bear Market which ushered in the Great Depression. Many H&S patterns appeared in the charts of the issues of that most painful period of modern human history.

Does this mean that we are in for another Depression? The possibly cannot be dismissed out of hand. At the very least I believe it means we are in for a most severe recession. But who doesn't know that already?

Good luck to one and all.

James Leo Donoghue

If you wish to use any of this material in your publication please contact the writer:

Phone: Sydney (02) 9453 9174
Mobile: 0410 570 394
Permission will be granted by e-mail

Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$35.00 (incl GST).

Or get a monthly update for 1 year for only Aus$150.00 (incl GST). Contact us at
DonoghueTechnicalAnalysis.gmail.com

Bull's-eye for XEJ forecast of 4th March ‘08 via detour

2008-10-16T04:37:00.000-07:00

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To see the forecast of 4th March 2008 for the XEJ Index (S&P/ASX 200 Energy) click on the following link to the appropriate Blog Archive:

http://donoghuecomputersystems.blogspot.com/2008_03_01_archive.html

The XEJ was then at 14787 and was breaking out downside of a rising six-week wedge. It was stated that if the XEJ began to collapse, it would probably go down to at least 12,150. It has now exceeded that level.

Most important was the following statement made on 4th March 2008: “Already there are technical reasons to suppose that the drop will be much greater than this once - and if - it gets underway.”

But what happened after the appearance of the six-week wedge back in early 2008? The XEJ proceeded to go down to 13,683 on 20th March 2008. And then it began a detour - a terrific rally all the way up to its intra-day high of 20,254 on 3rd June 2008.

Was it time to wear egg on the face? Time to eat humble pie? Not necessarily. Because in Technical Analysis when an important pattern appears, although it may not fulfil its warning immediately, it stands as a red, flashing signal that one must now be especially alert and on guard as trouble may well be lurking in the nearby future.

Obviously, as an analyst I attempt to forecast what probably lies ahead. When the forecast proves to be off the mark I re-examine the situation, looking at it afresh. Hind-sight is a cheeky villain, isn’t it? The XEJ rally that occurred from 25th March to 3rd June 2008 could be referred to possibly as a surprise “last-gasp” rally, or a surprise “blow-off” rally. Off course, dawning my Elliott Wave Theory hat – and with the benefit of hind-sight – that gasp formed a final Elliott wave which was part of the greater Up-move which began on 15th September 2006. Indeed, even that long Up-move was merely a part of the greater Up-move which began on 14th March 2003 at 3547.9.

Good luck to everyone in these historic but most treacherous times.

James Leo Donoghue

If you wish to use any of this material in your publication please contact the writer:

Phone: Sydney (02) 9453 9174

Mobile: 0410 570 394

Permission will be granted by e-mail

Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$25.00 (incl GST).

Or get a monthly update for 1 year for only Aus$120.00 (incl GST).

Contact us at DonoghueTechnicalAnalysis.gmail.com

Bull's-eye for XAO forecast of 7th Feb ‘08

2008-10-15T22:05:00.000-07:00

Click on chart for larger image

To see the forecast of 7th February 2008 for the XAO (Australian All Ordinaries Index) click on the following link to the appropriate Blog Archive:

http://donoghuecomputersystems.blogspot.com/2008/02/thursday-7th-february-2008-1127-pm-in.html

The XAO was then at 5668.3 and was breaking out downside of a rising two-week wedge. It was stated that it would probably shortly visit an area of support at about 5350.

As you can see from the chart above, the Index did indeed continue to drop the 300+ points until it visited the forecast 5350 area of support which proved to be from about 5368 to 5130.

5350 was not selected by random. Nothing in Technical Analysis ever should be so selected. Why was 5350 selected, then?

There are a number of reasons, some of the main ones being:

(1) The 150 Day Simple Moving Average was heading south. This was a strong indication that the Bear move for the XAO was going to continue.

(2) In the prior Bull Move Up, in November and early December 2006, an area of mild Resistance to the Bull’s Advance had occurred in the 5300 to 5460 area.

(3) Earlier, and most significantly, a stronger area of Resistance to the Bull’s Climb occurred in May, 2006 at 5352.10. This was the principal reason for selecting 5350 in the forecast of 7th Feb 2008.

In the buying and selling of millions - indeed billions - of dollars worth of securities around the globe, patterns reveal themselves. One of these pattern phenomena is known as the Area of Resistance or the Area of Support, depending upon whether it appears in an uptrend or a downtrend. In general it may be said:

Areas of Resistance on the way up, once broken through, become future Areas of Support on the way down and …

Areas of Support on the way down, once broken through, form future Areas of Resistance on the way back up.

Note how the forecast Area of Support at about 5350 back in March ’08 subsequently became an Area of Resistance for July, August and early September ’08.

Good luck to everyone in these most troubling times.

James Leo Donoghue

If you wish to use any of this material in your publication please contact the writer: Phone Land Line: Sydney (02) 9453 9174 or Mobile: 0410 570 394
Permission will be granted by e-mail

Order a forecast for any ASX Australian stock or any World Stock Market Index for only Aus$25.00 (incl GST).

Or get a monthly update for 1 year for only Aus$120.00 (incl GST).

Contact us at DonoghueTechnicalAnalysis.gmail.com

Bull's-eye forecast for Straits Resources Ordinary (ASX:SRL)

2008-10-06T02:47:00.000-07:00

Click on chart for larger image

To see the forecast of 13th September 2008 for Straits Resources Ordinary (ASX:SRL) click on the following link to the appropriate Blog Archive.

SRL was then at $4.00. The forecast was that it would drop to a minimum price of about $2.00.
http://donoghuecomputersystems.blogspot.com/2008/09/straits-resources-straight-down.html

As you can see from the latest chart above, NCM closed today Monday 6th October, 2008 at $1.825.

Note that the forecast drop from the Head and Shoulders pattern was a minimum target.

James Leo Donoghue

You can get our weekly forecast for any Australian stock listed on the ASX for 10 weeks for a total cost of only Aus$55.00 (incl GST).

Or get a monthy update for 1 year for only Aus$120.00 (incl GST).

Contact us at DonoghueTechnicalAnalysis.gmail.com

Transfield Services - Watch out below

2008-09-30T05:15:00.000-07:00

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Transfield Services Ordinary ASX:TSE closed on Tuesday 30 September 2008 at $7.59. The Head and Shoulders measurement formula (vertical red lines on chart) suggests a minimum price target of $2.50, a drop of over $5.09 over the coming weeks, possibly months. Expect counter moves (corrective rallies) on the way down. The $2.50 level is a minimum expectation.

Good luck to all with TSE.

Keep in mind that although the Head and Shoulders pattern is a good indicator of possible action no pattern is 100% reliable. If it was, chartists would own the world. And they don't.

James Leo Donoghue

Did you know you can get our weekly forecast for any Australian stock listed on the ASX for 10 weeks for a total cost of only Aus$55.00 (including GST)?

Or get a monthy update for 1 year for only Aus$120.00 (incl GST). Contact us at DonoghueTechnicalAnalysis.gmail.com

A bear is a bear is a bear, even in Paris: c'est un ours!

2008-09-23T04:00:00.000-07:00

Click on chart for larger image

The Paris Stock Exchange CAC 40 Index closed on Monday 22nd September 2008 at 4223.51. The Major Head and Shoulders measurement formula (vertical green lines on chart) suggests a minimum price target of 2700, a drop of over 1500 points over the next several weeks, possibly months. The current downward thrust might even take a year or more to drop the 1500+ points to the 2700 level. This level is a minimum expectation. I will post updates to these major stock markets as time goes on.

Note the declining 30 week Simple Moving Average, and especially the 40 wk SMA. These Moving Averages indicate a market in brutal decline. Until these MAs start moving horizontally at the very least it would be folly to think that the French Bear is finished his big meal, which just might be your hard-earned!

All the signals on this chart are frightening and they ought to be worrying longs. As shorting has been suddenly banned and/or heavily regulated in the past few days around the world in a knee-jerk panic, short sports must be cursing. Looks like the markets will collapse anyway, without them.

On the way down to the expected minimum 2700 level and below, expect many bear market rallies. It is worthwhile to check out the 1929-1932 decline to see how it progressed in a down-up-down fashion for what must have seemed like an eternity to all those being wiped out.

It is fascinating and worthwhile to study the smaller, Minor Head and Shoulders pattern that formed upon the Major H&S Pattern in the chart displayed. Such structures reinforce the negative message being flashed to chartists. Note also how its measurement formula indicated a minimum target of 4250 - which was arrived at in early July, 2008.

For those chartists interested in Elliott Wave Principle, I have indicated where I believe the corrective A-B-C waves are. Of course, as for the London FTSE 100 and many other major world markets, the potential end point of Wave C is way off the chart. By the way, if this A-B-C correction turns into a downward movement of 5 (not just 3) waves, it will be signalling much more than merely a severe Recession is in the offing. Elliott C waves are deadly.

Bon chance! Good luck to all with the CAC 40, or with any other market. Marshall McLuhan (1911–1980) was right. We live in a Global Village. C'est la vie!

James Leo Donoghue

Did you know you can get our weekly forecast for any Australian stock listed on the ASX for 10 weeks for a total cost of only Aus$55.00 (including GST)?

Or get a monthy update for 1 year for only Aus$120.00 (incl GST). Contact us at DonoghueTechnicalAnalysis.gmail.com

FTSE 100, Global Pain, More to Come.

2008-09-17T01:39:00.000-07:00

Click on chart for larger image

The London Stock Exchange FTSE 100 Index closed on Monday 15th September 2008 at 5204.20.

The Head and Shoulder measurement formula (vertical red lines on chart) suggests a minimum price target of 3600 over the next several weeks, possibly months. The current downward thrust, the "Slope of Hope" as Robert R. Prechter of Elliott Wave Principle fame would call it, might even take a year or more to drop the 1600 points to the 3600 level.

The 3600 level is a minimum expectation. The actual bottom level for the FTSE may well take more than a year to reach.

Note the declining 30 week Simple Moving Average. It’s mean and ugly. All the signals on this chart ought to be worrying longs and making shorts breathe easy. On the way down to the expected 3600 level and below, expect many bear market rallies. The reluctance of many market participants to witness and accept the end of this latest world-wide, secular bull market cannot be underestimated. There is power in denial. It is not merely greed or desperation that drives bear market rallies upwards, sometimes in spectacular fashion, but also a deep disbelief in the fact that the party is over.

As in the 1929 to 1932 decline, many players will choose to risk their money (or other people’s money) whenever they see what they believe to be a bottom, only to be repeatedly and bitterly disappointed. This secular bear will destroy the dreams, wealth and health of many individuals; it looks like being so great that it is perhaps appropriate to quote from the third chapter of Ecclesiastes:

For everything there is a season,
and a time for every matter under heaven:
a time to be born, and a time to die;
a time to plant, and a time to pluck up what is planted;
a time to kill, and a time to heal;
a time to break down, and a time to build up;

These profound words go on, of course. But the important point is that after anything - including global markets - breaks down, there will indeed come a time when they will once again build up. Someone wise once said, "He who can have patience can have what he will."

*

For those chartists interested in Elliott Wave Principle, I have indicated where I believe the corrective A-B-C waves are. Of course, the potential end point of Wave C is way off the chart. Elliottitians know the ferocity of C waves. They are the Hurricane Katrinas and Cyclone Traceys of stock markets.

Bon chance! Good luck to all with the FTSE, or with any other market, long or short or out on the sidelines. As Herbert Marshall McLuhan (1911–1980) noted, this is a Global Village we're living in. Back in Toronto in the 1950s my friends and I played bicycle chase outside Mr McLuhan's home.

Did you know you can get our weekly forecast for any ASX stock for 10 weeks for a total cost of only $55.00 (including GST)? Contact us at DonoghueTechnicalAnalysis.gmail.com

James Leo Donoghue

Straits Resources - straight down?

2008-09-13T04:41:00.000-07:00

Click on chart for larger image

Straits Resources Ordinary (ASX:SRL) closed on Friday 12th September 2008 at $4.00. The Head and Shoulder measurement formula (vertical red lines on chart) indicates a minimum price target of $2.00 over the next several weeks, possibly months.

Note the declining 50, 150, and 200 day Simple Moving Averages. All the signals on this chart ought to be worrying longs and making shorts smile. On the way down to the expected $2.00 price and below, expect some rallies on short covering and wishful-thinking bottom pickers.

Good luck to all with SRL, long or short or out (on the sidelines).

Did you know you can get our weekly forecast for any ASX stock for 10 weeks for a total cost of only $55.00 (including GST)? Contact us at DonoghueTechnicalAnalysis.gmail.com

James Leo Donoghue in Sydney, Australia

Bull's-eye forecast for bearish NCM Newcrest Mining

2008-09-11T19:09:00.001-07:00

Click on chart for larger image

To see the forecast of 8th May, 2008 for Newcrest Mining (ASX:NCM) click on the following link to the appropriate Blog Archive. NCM was then at $30.28. The forecast was that it would drop to a minimum price of about $20.55.

http://donoghuecomputersystems.blogspot.com/2008/05/newcrest-mining-ncm-rocky-road-ahead_08.html

As you can see from the chart above, NCM closed yesterday 11th Sept, 2008 at $18.60.

Note that the forecast drop from the Head and Shoulders pattern was a minimum target.

Stockholm warnings. A scary index indeed.

2008-08-21T15:32:00.000-07:00

If ever there was a scary index it is the OMXS ALL SHARE INDX (Stockholm). I do not wish to violate anyone's copyright material, so here's the link to the two year chart at Yahoo! Finance which I use constantly and am ever thankful for: http://finance.yahoo.com/q/bc?s=%5EOMXSPI&t=2y&l=on&z=m&q=l&c=

Note the top of the index in approx July, 2007. Then the painful "slope of hope", as Robert Prechter would call it, begins. This chart is classic Elliott Wave Principle in action, and to understand this vital tool (Elliott Wave Principle) which assists in interpreting and understanding market volatility and action – and, most importantly, possible if not likely, direction - tune in to the chief apostles of Ralph Nelson Elliott at http://elliottwave.com/

There has been a major downward thrust in progress in this Stockholm index from its top in July, 2007. Thus far, the downward thrust has unfolded in a classic Elliott wave pattern of 5 waves down from the top in July, 2007 to the bottom in mid Jan 2008. Commencing from that point is an A-B-C (up-down-up) compensating upward correction ending in about mid May 2008.

The renewed downward thrust beginning in about mid May 2008 carries a foreboding message. The downward thrust, as you can see, ended in about mid July 2008. The upward compensating reaction revealed itself in a 3 wave pattern (up-down-up), ending recently in this month, August 2008. Elliott Wave at least offers a basic understanding of what will most likely follow - and it's bad news. Unless you are a short sport, of course.

Looking at the Yahoo max chart for this index at http://finance.yahoo.com/q/bc?s=%5EOMXSPI&t=my&l=on&z=m&q=l&c= you can see a major head and shoulders pattern. The Left Shoulder took the first half of 2006 to build. Top of the Head occurred at about mid 2007. Top of Right Shoulder was in place at mid May 2008. If you are having difficulty seeing this pattern then get a copy of Technical Analysis of Stock Trends by Robert D. Edwards and John Magee.

The Bear Market shovel digs even deeper into this open grave when you look at the 200 Day Moving Average at http://finance.yahoo.com/q/ta?s=%5EOMXSPI&t=2y&l=on&z=m&q=l&p=m200&a=&c=

For a deeper appreciation of the importance of moving averages a good book is Stan Weinstein’s Secrets for Profiting in Bull and Bear Markets.

They do say fortune favours the brave. Well, the very best of Irish Luck to you if you are long. I myself am out of the market. Cash is not such a bad place to be during these troubling times.

James Leo Donoghue
Sydney, Australia

Update: effect of ALL's One-Day Reversal

2008-06-10T04:35:00.000-07:00

Click on chart for larger image

See the blog of 20th May 2008 titled:

Will ALL's One-Day Reversal guillotine its Minor Bear Market Rally?

The dramatic effect of the Reversal signal is plain to see.

James Leo Donoghue

CCL: Will the Real Thing become the Real Drop?

2008-05-27T03:34:00.000-07:00

Click on chart for larger image

In October 1996 CCL hit a high of $18.15.

From a low of $3.06 in June 2000 it began to climb in 5 Elliott Waves to a high of $10.75 in December 2007. This was the topmost price of the Head and Shoulders pattern in the chart above.

The H and S measurement formula (vertical red lines on chart) indicates a minimum price target of $6.52 over the next several days or weeks.

Note the declining Simple 150 Day Moving Average - an ominous, worrying signal for die-hard Real Thing bulls.

James Leo Donoghue in Sydney, Australia

Will ALLs One-Day Reversal guillotine its minor Bear market rally?

2008-05-20T04:31:00.000-07:00

Click on chart for larger image

Are Aristocrat Leisure’s brave bulls about to be executed?

They have been hard at work these past nine trading days, with ALL’s price even gaping up today.

Alas, after the gap, the cruel appearance of a One-Day Reversal! Looks like putting finis to the minor rally.

Hopefully for ALL Bulls it will signal but a temporary exhaustion of their forces.

James Leo Donoghue

Newcrest Mining (NCM) - Rocky road ahead?

2008-05-08T04:52:00.000-07:00

NCM closed today (Thursday 8th May 2008) at $30.28

Click on chart for larger image

This gold producer has recently completed a Double Head and Shoulders pattern.

The Neckline was penetrated on the downside ten trading days ago.

The price is currently undergoing a Pullback to the Neckline. Many short sports will be excited by this occurrence as a Pullback at this point in the pattern’s formation is an ideal short sell signal.

The Measuring Formula (the vertical red lines) calls for a drop in price to about $20.55 over the next several days.

James Leo Donoghue

Pining for the Bull … by shooting it

2008-05-06T04:45:00.000-07:00

Tuesday 6th May 2008, 9:45 PM, Sydney, Australia

Don’t mention there’s a grizzly in the room. It might frighten people and cause a panic.

A number of optimistic headlines have been appearing in the Aussie press. I was browsing through a couple of them on the weekend.

I suppose there is not much profit in newspaper vendors selling financial doom and gloom. Much better for their bottom lines to put a happy face on their wares, a positive spin on their words.

Some of the headlines:

From the Sydney Morning Herald, Weekend Edition, May 3-4, 2008:

“Volatility may be coming to and end”

“Crisis, what crisis? Optimism is back”

And from the Business Section of The Weekend Australian:

“Much ado about nothing: the most serious financial crisis since the 30s appears to be over”

Anyone who has survived a bear attack or two will recognize that the current upmove in many global markets is quite likely to be a classic bear market rally, a bear trap. Of course, one ought to be mindful of the fact that anyone who attempts to forecast the future course of market activity is in danger of having to eat humble pie, to go around for awhile with egg on the face, and so on.

Pollyannas apart, we are into earthquake territory. The current bear market rally is most likely but the eye of the storm. I believe there are many storms and many eyes to come. It is the sudden periods of calm that will be most treacherous, tempting many onto dangerous ground.

J.L. Donoghue

Bombay present and Osaka past: eerie similarity. Portent of things to come? Probably.

2008-05-01T03:13:00.000-07:00

Thursday 1st May 2008, 8:22 PM, Sydney, Australia

“Share fall stuns Indian investors” appeared on the BBC International site at http://news.bbc.co.uk/2/hi/business/7305364.stm on March 20th, 2008.

Investors in India may soon be far more than merely “stunned”.

The eerie similarity of their Bombay BSE Sesex Index now and Japan’s Osaka Nikkei 225 in 1989/90 should be sounding alarm bells among chart-reading Indians, or at the very least, tinkling a sound of caution.

Check out the BSE SESEX (Bombay) index at
http://finance.yahoo.com/q/bc?s=%5EBSESN&t=my&l=on&z=m&q=l&c=

and the NIKKEI 225 (Osaka) at
http://finance.yahoo.com/q/bc?s=%5EN225&t=my&l=on&z=m&q=l&c=

The astounding rise in the Bombay Index from late 2002 till the end of 2007 mirrors the astounding rise in the Nikkei 225 from 1984 to 1990.

The correction in the Bombay from the start of 2008 till now again mirrors the correction in the Nikkei that occurred in the first half of 1990. Of course, that initial correction in the Nikkei was merely the opening downward blast in one of history’s great bear markets.

Will the Sesex repeat the Nikkei’s unhappy performance? Possibly. Perhaps it’s time to err on the side of caution.

The great thinker Ralph Nelson Elliott (1871 – 1948), father of Elliott Wave Theory, provided chartists with an additional tool for interpreting market action. When one applies Elliott’s Wave Principle to the Sesex and Nikkei indexes one is at least left wondering: is Japanese market history about to be repeated in India?

J. L. Donoghue

XEJ 4th March 2008

2008-03-04T03:42:00.000-08:00

Today (Tuesday 4th March 2008) the S&P/ASX 200 Energy (XEJ) index closed down 203 at 14,787.

The XEJ has been locked into a 6-week, Rising Wedge area of price congestion which commenced on 22nd January 2008.

Rising Wedges are common occurrences in Bear Markets.

As they are generally negative patterns, the probability is that the XEJ will soon break out of this Wedge formation on the downside.

Because of the Five-Point Reversal (the Broadening Top indicated by the 5 numbers on the chart) there is a clear probability of a severe correction ahead.

If the XEJ begins to collapse, it will probably go down, on balance, to at least the 12,150 level. Already there are technical reasons to suppose that the drop will be much greater than this once - and if - it gets underway. However, I believe it is best to take one step at a time and now wait and see how events unfold.

James Leo Donoghue
donoghuetechnicalanalysis@gmail.com

2008-02-07T03:51:00.000-08:00

Thursday 7th February 2008 11:27 pm in Sydney, Australia

The Australian All Ordinaries Index (XAO) closed today down 9.3 (-0.2%) at 5668.3

It is breaking out downside of a rising 2 week wedge.

It is probable that it will shortly visit an area of support at about 5350.

James Leo Donoghue

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