Think Financial Markets - Excellence In Trading Financial Markets

Think Financial Markets - Excellence In Trading Financial Markets

Market Sentiment

It is essential that we have a general feeling of which direction our market may trade on any given day.

To achieve this it is necessary to be aware of how global markets have performed on the previous day as well as during the night.

We measure this sentiment by allocating points to certain global indicies to measure their strength or weakness.

We look firstly to The Dow Jones Index. This index is one of the world’s most influential and as such rates very highly in determining the daily sentiment.

We allocate between 2 pts plus or minus if the overnight movement is less than 50pts or 4pts if over 50pts

The next most important indicator is the SPI200 which is the futures contract covering the Australian markets top 200 stocks and trades almost 24hours per day.

We also allocate between 2 and 4 pts as per the Dow.

Then we add both the Nasdaq and the S&P 500 indicies from the U.S they are allocated points as follows

Nasdaq above /below 30 ,plus or minus 2pts or less than 30, 1pt

S&P 500 above /below 15, plus or minus 2pts or less than 15, 1pt

Next we add the FTSE 100 results from England and the NIKKEI 250 from Japan which are allocated 1pt for a plus or minus result.

The maximum points on our table are 14 and variations of this will gauge bullish or bearish sentiment.

Other very important overnight markets to be taken into consideration when trading the Australian market are firstly the strength or weakness in the Aussie dollar versus the US dollar and we rarely have a good day if the commodity markets have been sold down during the night.


Sunday, June 3, 2007

The China Bubble?

The China stockmarket has been the focus of most reports lately, with headlines and comments such as "Stockmarket up 50% for the year", "China stocks trading at 50 price earning ratios (PE)" "The China Equity Bubble".

Hang on.. the PE figures quoted in reports are last years figures, currently Chinese stocks are sitting at forward PEs of about 25 for 2007 full year and expected forward PEs for full year 2008 are 20.

Now compare that to the Australian full year (FY) 07 PE of 17 and forward FY08 of 16, and the US current FY07 of 17 and forward FY08 of 15, the China figures while still higher, hardly suggest a bubble, in a country that has one of the highest savings records in the world and a population of around 1.3 billion.

While we are on popluation figures, this week comments were reported that the China sharemarket saw trading accounts opened top 100 000 million, and the population of China is....?

Last week I heard on the radio, one comment that made sense, "China stocks have recovered 50% of their February falls. Now any chartist or fund manager that has ever heard of Fibonacci retractment numbers and /or W.D.Gann's 50% rule would take note of possible resistance levels.
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1 comment:

Tredagh said...

Anthony,
Just checked the Chinese market on the Market Analyser. There are 21 Iron Ore stocks and 13 Coal stocks listed (Fibonacci Numbers). All have risen at least 100% since February and without exception have currently retraced to either the 61.8% or 50% levels on shaven candles. From the low of February, a lot of the stocks reached a high of 161.8% before turning south. It's worth having a closer look at.

June 3, 2007 at 9:46 PM

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