Tag Archives: Bullish

Cycle phases: how to identify them

Think about you are a trader and you want to profit from the price movements in the short term in the stock markets. Think about you have identified a bullish trend, but you know that stocks go up and down in a long-term direction. What are you looking for? Short-term trends (or cycle phases).

We have already written about trends and the strength of them. Now the point is how to earn money with trading if you are a very active investor.

Cycle phases in T-Advisor

The four charts above point the four main cycle phases. In T-Advisor we identify them with a U (from UP) and with a D (from DOWN). They are signalling different movements into a general trend: for instance, there is a D2 although the general trend is bullish.

Shortly, a U1 is the beginning of a short-term upward trend. The trader should take into account the entry price. A U2 points a brake in this trend. Be careful, because you have already some earnings. You have to take into account a sell price.

A D1 announces the beginning of a short-term downward trend: it is time to sell and enjoy the earnings. A D2 shows the end of this movement. If you have not sold before, just wait till the short-term direction changes. If you have any stock, maybe it is time to follow the prices to buy in the right moment.

Cycle phases in T-Advisor

There are also some other charts, as the one above, that combine two cycles in the same pictures. These are quite important, as they are pointing the exact moment of the changing trend. For instance, the chart above is the change from down to up: then it is time to buy.

Learn about these short trends let the investor foresee the market movements and how to react. For a trader, this information is vital. That is why we always insist that figures, charts and data are the main strength in T-Advisor for their users.

Stock trend: a view for investment opportunities

Free markets have a common point: prices are steadily changing. Sometimes they go upwards, sometimes they go downwards. Experts and analysts try to find a rule in these continuous changes. This rule is the trend.

The trend is the general direction of the stock (but it is also applicable for other listed assets, as ETF, funds or bonds, for instance) in a period of time. The investors’ profile and style will guide which time frame is important: for daily traders, they take into account short term trends, while a more traditional investor, who is saving for a long-term goal (studies for his or her children, retirement), the point is the tendency in a wider period.

If we consider a medium or long-term trend, the options are from very bearish to very bullish. In other words, from a strong downwards trend to a strong upwards trend. The middle point is the lateral movements, when the asset has no clear tendency.

In T-Advisor we consider the trend analysis as an important figure to take investment decisions. Our system has established a code with three arrows. Each arrow sums up the trend of the last three weeks. Sometimes, there is a combination of up and down arrows, which help the investor detect a change in the direction and react to the market movement.

Different trend signals in T-Advisor

To complete the trend analysis, it is necessary to know if it is strong or not to be prevented about how long it will probably last. The word “probably” is quite important. Analysts consider that the market has a cyclical behaviour and it repeats the movements every certain time, but the base is probabilistic: it could happen or not.

Trend strength in T-Advisor

The trend strength is the slope of the main trend. In this case, the analysis considers a long-term direction, avoiding taking into account short-term changes. The higher is the number, the strongest is the trend. In T-Advisor, this data completes the analysis of the trend signalled by arrows.

PIIGS, dirty or pata negra markets?

It is already a bit long time since the beginning of the (still) current financial crisis, when Lehman Brothers declared on bankruptcy and panic rushed into the stocks exchanges. The wave, or much better tsunami, affected deeply all the world, but southern European countries and Ireland (the celtic tiger) suffered the hardest consequences: Portugal, Ireland and Greece were bailed out, Spanish banking system was also bailed out and Italy stood close but finally avoided a troika indirect government.

The acronym PIIGS, from the initials of these countries, emerged again, pointing them contemptuously. Their stocks exchanges experienced a big fall of, at least, two thirds of their value from the highest point to the lowest, as our table shows. All of them presented cheap prices. After the worst part of the crisis, PIIGS show now positive signs in their economies and capital flow again, but prices are still cheap.

MARKET

HIGHEST(2007) LOWEST(2012) DIF. % CURRENT(YESTERDAY)

DIF. % VS. HIGHEST

Spain

15.945,70

6.065,00

- 62%

9.982,70

- 37%

Portugal

13.657,70

4.512,27

- 67%

6.928,19

- 49%

Italy

44.364,00

12.895,00 *

- 71%

19.682,82

- 55%

Greece

5.334,50

485,18

- 91%

1.260,17

- 76%

Ireland

9.968,48

1.916,38 *

- 81%

4.802,82

- 52%

* Lowest in 2009. Sources: Historical indexes charts and T-Advisor compilation

Last year was quite good in PIIGS markets, with a high performance in Spain and Italy, for instance, but the trend keeps on, as the Global Market tool in T-Advisor show. These are the six more bullish markets last week:

PIIGS: Six top bullish markets by T-Advisor

This result repeated in January: Spain and Portugal were the whole month in the top 3 and Italy amongst the 5 more bullish. “PIIGS can fly”, said recently an analyst quoted by AFP, although the sentence is not new, as some comments focused already in that way last October. However, uncertainty remains in these countries. Portugal and Greece are still indirectly ruled by the troika, while Italian and Spanish growth outlooks are still weak. In any case, investment trends detected by T-Advisor tools show that PIIGS markets were in January, at least, pata negra.

Bullish mood in stock markets for 2014

Bullish markets: Some details about outlook 2014 by T-Advisor

After a quite good year in the financial markets, with good figures and profits, the question emerges: what about next year? Will it be better, worse or as good as 2013? Analysts are quite optimistic in their forecasts for 2014.

First of all, the mood is mainly bullish for next year. Market consensus agrees about double-digit returns in the stock exchanges. It is considered that US economy will grow, the monetary policy will remain expansive (despite the possible Fed tapering) and the interest rates will be still low.

The statistics help also this optimistic mood. A good year is followed by another upwards, so the studies. Since 1945, S&P 500 recorded an average 10% up after a year with 20% increase (in the most of the cases, not ever).

When we look at the different assets, equities are expected to provide the highest return, following a survey amongst investment professionals. 71% bet for them, against 4% for bonds and 10% for commodities. What products refer, ETF will also receive a push up, as another survey announced already in October. At least, 50% of investors planned to increase their ETF exposure in 2014 and 46% wanted to learn more about them from their advisors for next year.

However, there are also risks and fears for analysts. The uncertainty about the tapering (mainly, how deep it will be) is still a shadow for the investors. That is the concern for 68% of the CFA Institute members, for instance. The Fed meeting this week will possibly bring more light about this point. Political instability is also a problem. And it emerges a perception of financial bubble again, but with disagreement amongst the overvalued asset.

To sum up, there is a bullish spirit for 2014 in the air. After these long years of financial crisis, banking resize and unordinary monetary policies, the investors keep on the mood that has inspired 2013, with high returns and profits, and expect a good year in the stock markets.