Saturday, February 20, 2010

Top40 - end of the day recap for week ending on February 19th

Many traders get stuck easily in their daily routine and that helps them to forget about the bigger picture.

So, what is the bigger picture for trading ALSI futures contract?

ALSI futures contract is contract listed on Top40 index on Johannesburg Stock Exchange and it is guided by that exact index. Symbol code for Top40 index is J200 and that is often the reason why we refer to Top40 as J200.

This post will be first in the series, as I will try to publish updated end of the day chart for Top40 index in South Africa. I plan to work on this every weekend and will try to publish it not later than Monday mornings. My hope is that these updates will not serve only traders to make plans for coming week, but serious long term investors as well, as they are looking at their charts only once-twice a week.

Enough talking, it is time to check the chart:

Top40 dropped 2864 points (11.04%) from high of 11. January 2010 to low of 5. February 2010. At that time all major indicators (MACD, RSI and Stochastic – all listed in that order at the top of chart) were making fresh lows for year 2010. Such occurrence did send us warning that Top40 slide was maybe ahead of itself and that one should watch what is going to happen.

From the low, Top40 did rally 1280 points (5.52%) as of the end of the day on Friday. Also, as of Friday there are mixed signals on that chart:
- MACD made bullish cross from very low level;
- RSI is around 50 level
- Stochastic did rally and it is on overbought level.

On last two trading days market opened lower to rally into the close, showing us that bulls still have some power left to push market higher.

Three moving averages on the chart are:
- 200 simple moving average (sma) - indicates long-term trend
- 89 simple moving average (sma) - indicates intermediate trend
- 10 exponential moving (ema) - indicates s short-term trend

I will have them presented with every weekly update, just as a simple tool to identify market direction.
  • long-term (200sma) - UP
  • intermediate (89sma) - FLAT
  • short-term (10ema) - UP
Hope this post and posts of same nature in the future are going to help more traders and investors to make their decisions.

Trade with trend!

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