Stockmarket update 15 June 2012

From my last post 16 May 2012

The only scenario in which bullish bets should be taken is if price can again recapture the 44.83-45.10 area (which will now act as resistance). I do not believe this will happen without significant Central Bank intervention and a solution to the Greek political crisis. However, nothing can be ruled out at this point given the crazy situation in Europe.


Given the current technical picture and political uncertainty, I will be switching my equity positions into USD cash on any significant short term rally in equities over the next week. Given my current holdings this will entail switching from the Russell Global 90 Fund (currently at 40%) into the Russell US Dollar Liquidity Fund II. To keep the switch simple, I will leave the Fidelity International Fund at it's current 10% holdings.

The expected bounce from oversold conditions has begun.


Click all charts to enlarge

ACWI 60 Minute

The short term 60 minute chart turned bullish June 06.  Price appears to be forming an inverse head and shoulders pattern.  On a break above 43.39 the projected target for the pattern would be 45.72.

I will be monitoring this over the next several days.  The Greek elections on June 17 would possibly be the catalyst to move price above the neckline and initiate the pattern.

ACWI Daily

The daily chart formed a bullish Island Reversal at the beginning of June.  Price remains below the 200 day moving average @43.57.  A break above the resistance at current levels plus the 200 dma would clear the way for a move back to the strong resistance @ 45.00-45.40 along with the sloping downtrend line.

ACWI Weekly

The weekly chart remains bearish.  Price is currently right in the middle of current resistance @ 42.77-43.22.  A break above would target the next weekly resistance @ 44.68-45.68.  Given the possible inverse head and shoulders on the 60 minute chart, should the pattern form the target of 45.72 fits nicely with this current weekly resistance.  This would be a great place to sell into the rally should it transpire.

ACWI Monthly

The monthly chart confirmed bearish at the end of May.  It would take a monthly close above the 8 month simple moving average to turn the chart back to bullish.


Bottom Line:

Holding my current 50% long equity/50% USD positions on the expected bounce.

The Greek elections are on Sunday with a ton of fear in the markets.  Greek law does not allow polls to be conducted 2 weeks before the election so there is a lot of speculation as to which way they will vote.

The largest on-line event gambling site (Intrade) shows punters are betting there is a 70% chance New Democracy wins, a 27% chance the Radical Left (Syriza) wins and 0.5% chance Panhellenic Soc Movement (PASOK) wins.  I have used this source to game other market outcomes and most times they have an uncanny ability to be right.  As such, I believe the pro-Euro vote will win and with it there will be a significant market advance next week.  Given this, I am prepared to hold my current positions as stated previous with the intention to move into a 100% cash position when the short term charts again turn bearish.  As of today they are still bullish so I will stay with the short term uptrend.


As of today I remain in a 50% Equity/50% USD Cash position as I indicated in my last post:


-Russell Global 90 Fund: 40%

-Fidelity International Fund: 10%

-Russell USD Liquidity II Fund: 50%


My switch out of the Russell Global 90 Fund into the Russell USD Liquidity II Fund will be blogged as it occurs.

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