GML - Where to from Here? Part 3 - 17th February 2010
In view of my recent Energy analysis revealing interesting opportunities I have decided to advance this sector in the pecking order.
THE ENERGY SECTOR
My first examination of this sector is always directed to the futures contracts which invariably, unlike gold futures for gold mining shares, give clues to the performance of energy shares.
The four contracts I follow are showing similar features with prices just below upside resistance and yet a little distance away from support levels.
The Crude Oil Sweet contract illustrates these characteristics with resistance at 81 bearing prices down which could push prices down to a March low in the 59 area. The Gasoline, Heating Oil and Natural Gas contracts have similar prospects with future potential for profitable buying opportunities.
There are six UK, six US and 3 European buying opportunities lined up for energy shares. In the event of our supports breaking then we have 3 ‘shorts’ flagged up.
A typical example for a buy is Premier Oil.
There does seem to be potential for profits here albeit against the main trend which would eliminate gearing and place trades as mildly speculative.
THE WORLD’S STOCK MARKETS
For some considerable time virtually every stock market in the world has been struggling under Gann resistances and generally continue to do so. This is the first time in my career I have seen so many markets being in a similar position for such a long period of time.
A typical example of this is the European Index which has meandered under Gann resistance at 3000 since last July until weakening over the last six weeks. However it should be noted that the two week chart lows (on the left hand side of the chart has not yet been decisively broken on the downside. The short term trend is down but the medium to long term trend is still positive. In view of this our ‘short’ position for Europe was not fully geared. In the event of a break under the two week chart low the profit potential will climb when a full gearing will be recommended for future positions.
On the bullish side only Dubai, Spain and Italy are on support. However none have yet been supported by a short term trend change to the upside.
MEDIUM TO LONG TERM TRENDS DOWN
The markets which have shown breaks under two week chart lows are Belgium, Brazil, Germany, Hong Kong, India, Malaysia and Taiwan and can now be considered as ‘shorting’ candidates with full gearing subject of course to Gann analysis setting up trades.
The remainder of the 60 world markets we cover each week still have positive to neutral two week charts.
Germany looks to be in an interesting position having not only created a break below the two week chart but has recently also broken under the rising support angle. Subject to a Gann analysis ‘short’ being triggered there is the probability of a fall to the 5000 area which could develop a promising trade.
THE DOW JONES INDUSTRIALS
Despite the US being the biggest debtor nation the world has ever seen it still dominates in the world’s stock markets so I suppose I am obliged to give it particular attention. The Dow chart is typical of most other markets with substantial upside resistance at just under 11,000 with a recently broken support angle and a gaping black hole down to 9,000. Here again the two week chart remains intact making our short position here speculative.
The January Effect on the vast majority of world markets is bearish with most falling throughout January. Almost to a fault the markets are lumbering under heavy upside resistance promising a highly profitably year for ‘shorters’ Of course, there is always the chance that the upside resistance could be smashed on the upside but this seems an extremely unlikely event. Where would the necessary good news come from in this debt ridden world? The worst of all scenarios, from our point of view, would be a sideways move which when recognised would lead to our withdrawal from the stock markets in favour of other more promising investment areas.
A feeling of Déjà Vue takes me back to 2000/2003 when we enjoyed returns of over 100%. I can see a great chance of similar pleasures from market weakness especially when accompanied by steady commodity progress during 2010. Philological preparation and planning should begin NOW before the two week charts break.
If they do all hell will break loose.