Woodside Plaza, a skyscraper in Perth, Western Australia. The small building in the foreground is Bishop’s See Tower 1. (Photo credit: Wikipedia)

Karratha location map in Western Australia (Photo credit: Wikipedia)

I acknowledge a small shareholding in Woodside Petroleum Limited, and have selected it for  my weekly chart analysis, to aid in my decision making. It is perhaps worth noting that Woodside is a major sponsor for the Fremantle Dockers AFL football team.

Background information

A record profit report of $2.98 billion announced Feb 20, 2013 reminded investors that 58-year-old Woodside is still Australia’s premier oil and gas producer, and has infrastructure that would cost $80 billion to replicate today. This net profit result is a stunning 98% increase over the previous year.

It has been the new Pluto project, located  in the Carnarvon Basin 190 km north-west of Karratha, in Western Australia, commencing operation in April 2012, that has resulted in the 31% increase in LNG production, and the 30% gain in sales. Woodside is fortunate to have a 15 year sales agreement with Japanese companies, Kensai Electrical and Tokyo Gas for its LNG production.

Share price has languished since the GFC collapse

The TA big-picture seen in the monthly chart.

Between April 2003 and April 2006 the share price trended steeply to a high of $49.40.

After retracing to $34.52 in April 2007, the share-price recommenced its ascent, to reach an all-time high of $70 in May 2008,

Since then the share-price has ranged between support at $30 and resistance at $54.

In the last two years however the share-price has hovered at the lower end of the range.

A buy and hold strategy would have been extremely profitable between April 2003 and May 2008.

Since then long-term long positions in Woodside would have been mostly disappointing.

? Imminent break-out from trading range.

The Medium-term picture

The share-price declined from a high of $50.83 April 15 2011, to a low of $29.76 on October 3 2011.

From then the price has been confined to a trading range between support at $30 and resistance at $38 on the 38.2% Fibonacci retracement line – a period of about 18 months.

The week ending Feb 22, 2013 the share price briefly penetrated resistance at $38, but fell back when the shares went ex-dividend.

There is a rough correlation between the duration of a trading range, and the extent of trending once there is a break-out.

On this basis one might expect a target share-price of $51 over a medium term.

Since the share-price on the weekly chart has trended higher since July 2012, it would seem to be only the matter of a week or two before the price does break-out above $38.

WPL share-price in an up-trend since Nov 2012

The Short-Term Outlook for Woodside Petroleum

There has been a steep rise in the share-price from $34.80 on the 05/02/13 to a high of $39.21 on the 20/02/13, the day the favourable profit report was announced.

Buy on rumour is the dictum; sell on fact! The market clearly anticipated the favourable report. The later 61.8% retracement of this move coincided with the shares going ex-dividend.

Conclusion

The record profit result for Woodside is likely to trigger a trading range break-out for Woodside within the next few weeks.

If this eventuates as anticipated, target prices to look for would be $40 (50% retracement), $43 (61.8% Fibonacci retracement) and $51 (100% retracement) from the weekly chart.

Disclaimer

These observations and opinions are those of the writer only and should not be relied upon in decision-making. They are for general information only and do not constitute investment advice. See Disclaimer above.

Related articles

• Woodside on track to lift oil production (news.smh.com.au)
• Australian gas giant eyes partnerships in Canada (business.financialpost.com)
• Woodside slates $2.5b for offshore project (news.com.au)

Is the up-trend resuming?

The week just finished, March 1 2013

On Thursday of the previous week (Feb 21) a pronounced sell-off  halted an extended impulsive uptrend in the ASX 200, and might have initiated further falls. This has not eventuated

After that week finished just above the 5000 support level the first three days of this week saw this support level hold, and prices remain above the support of the trendline.

Sellers dominated trade Thursday 21, but Thursday 28 saw buyers take control, shrugging of renewed European debt concerns over the hung parliament Italian election result.

Buyers only just managed to push the index above the previous high to 5112.5 berfore falling back to finish the week Friday on 5086.1

The gain for the week was a healthy 68 points, and continues the strong impulsive move higher on the weekly chart. (see Weekly Chart)

What might the market do this coming week? 

The Daily Chart shows three technical features worth noting, showing lingering market ambivalence.

1. The high of this week was only 6 points higher than the high of the previous week. If the market moves lower this coming week a double top will have formed, suggesting reversal of trend.
2. Friday’s candlestick can be called a paper umbrella, with a small real body, no upper shadow, and a relatively long lower shadow. An end of the week sell-off was halted when  buyers saw the lower prices as a buying opportunity.
3. Thursday and Friday’s candlesticks in combination form a harami (the word means pregnant) which also warns of possible trend reversal.

Trading early in the week may well clarify whether the uptrend will continue or not. Lower prices, particularly falls through trendline support, and support at 5000 would suggest  change in trend.

However it is hard to see the strong uptrend reversing this week.

Related articles

• The Week Ahead: Should You Be Buying or Selling? (forbes.com)
• IBEX Forecast March 1, 2013, Technical Analysis (forextv.com)

The Weekly ETF SPY usually highlights how to make breakouts work for you, but this week’s ETF SPY is about how to avoid getting burned by fake breakouts, fake breakdowns, or as I’d like to call them, fake out breakouts.

Trend line breakouts or breakdowns confirm a change of trend (at least temporarily) about 70% of the time. We’ve used such trend line breaks to identify deeper corrections in 2010 and 2011.

However, not all breakdowns are equal. Certain patterns are notorious for creating fake out breakouts.

If you are familiar with Elliott Wave Theory (EWT), you know that markets move either in 5 (trending) or 3 (counter trend) waves.

Within the 5-wave pattern, waves 4 have a reputation for zigzagging above all kinds of support/resistance levels.

The February 3, Profit Radar Report featured a complete forecast for the year 2013 (based on technical analysis, seasonality and sentiment). Directly ahead, at least based on my analysis, was a wave 4 correction.

Here’s how the February 3, PRR described what might be ahead: “Frustrating and seemingly aimless but powerful up and down moves should eventually retrace about a Fibonacci 38.2% of the preceding wave 3. The S&P is likely to spend much of February and March in a choppy correction.”

It’s too early to tell if we are in a fourth wave, but we were prepared for fake out breakouts. The chart below shows false breakdowns for four key ETFs: XLF, XLK, QQQ and SPY.

All four break below support, but we didn’t use it as a sell signal. Quite to the contrary, we used the 10+ year support/resistance line for the SPY ETF as a stop-loss for short positions and closed our short positions at S&P 1,491.

In summary, trend line breaks are one of my favorite indictors, but they must be viewed in context. If you don’t open your eyes to the bigger picture, you open your portfolio to bigger losses.

Make the ETF SPY work for You  >> Sign up for the FREE iSPYETF Newsletter to receive the Weekly ETF SPY Pick

The Dow Jones Industrial Average (DJIA) reversed trends with an exclamation mark on Monday. After spiking to a new recovery high, the DJIA (corresponding ETF: Dow Diamonds – DIA) fell to a 21-day low.

A chart simply and elegantly displays a ‘bad day’ like this with a big red candle. This one red candle engulfs the 21 previous candles (shaded gray box).

This red candle high is also called a reversal candle. Candles like it tend to mark trend reversals. In this case from up to down. This doesn’t mean the Dow can’t and won’t eventually move higher (short-term bullish developments discussed below), but it cautions of lower lows ahead.

Two other facts enhance the message of this red candle. The high occurred right against a parallel channel anchored by the June/November 2012 lows and September 2012 high.

Perhaps even more importantly, the Dow stalled and reversed just before its all-time high water mark at 14,198.10. The Dow’s all-time high is huge resistance.

The February 18 Profit Radar Report referred to the all-time high resistance: “Next week has a bearish seasonal bias. With its all-time high just ahead, the Dow has a well-defined resistance level for a short trade. Aggressive investors may short the Dow close to its 2007 high with a stop-loss at 14,200.”

At the Profit Radar Report we call this kind of a trade a low-risk trade. Why? Because we were only 200 points or 1.5% away from the stop-loss level.

One Swallow Doesn’t Make a Summer

But one swallow doesn’t make a summer one one red candle doesn’t make a bear market. After two 90% down days (February 20, 25) stocks were likely to rally. That’s why Monday’s (February 25) Profit Radar Report recommended to cover short positions at S&P 1,491.

In addition the VIX triggered a sell signal (buy signal for stocks) yesterday. Although I think that stocks will slide to a lower low, it will take a break below support or a spike to resistance to place a possible short bet. Important short-term support/resistance levels are outlined in the Profit Radar Report.

The Fanvestor via @fanvestments

#TheFanvestor #tos

————————————————————————————————-
Best Forex traders worldwide, give you advice for FREE to buy or sell. ZuluTrade converts this advice to a live trade in your broker account automatically, again for FREE! Unique service, I have already opened an account!

http://moonlightforex1.zulutrade.com

————————————————————————————————-

————————————————————————————————-
MyDigiTrade is one of the most modern, innovative and powerful platforms which allows copying deals of professional traders to your brokerage account in real time. http://www.mydigitrade.com/traders?pr=9276#.UMQuyQq3ojw.twitter

————————————————————————————————-

The retracement we had to have

The Spinning Top (Photo credit: Wikipedia)

The week in retrospect

The XJO continued its steep ascent the first three days of last week. Just when it seemed that the correction would be delayed another week, sellers hit the market on Thursday 21st February 2013, driving the index sharply lower by 96 points to finish the day at 4980.

The expectation was for further falls on Friday but instead buyers  rallied the market  for the XJO to close the week above the 5000 resistance level at 5018.1

The weekly chart candlestick shows a spinning top

The spinning Top Candlestick

A “spinning top” candlestick appearance is shown on the weekly chart. This term describes an appearance in which there is a small real body (there was just a 15.8 point decline in the index for the week) but long shadows at the top and bottom. Both buyers and sellers took control for a time. but could not sustain a greater advancement. There was indecision by traders and the net outcome was neutral.

The retracement was less than many expected, but it respected support at 5000 suggesting continuation of the up-trend next week.

Related articles

• Weekly Market Wrap: February 22, 2013 (forbes.com)
• Does Today’s Bounce Mean It’s Back to Normal for 2013 Market Rally? (t3live.com)
• Today’s Top Economic News – 22 February 2013 (focuseconomics.wordpress.com)
• NASDAQ Futures Forecast February 22, 2013, Technical Analysis (forextv.com)

Mc Dowell has given a close below a crucial level and has no support until 1755. It should be sold below 1848.

As we can see potato seems to be forming a pennant kind of a formation. Which will break on a move above 847. 872 is a major resistance. Hence target is kept at those levels

Nifty is at a very critical juncture and needs to be monitored during the closing time! We can see from the chart that after breaking a 7 month old trendline which originated in June 2012, Nifty re-tested it yesterday.
This trade is typically called as a “kiss your momma” trade and leads to continuation of the downtend.
Thus Nifty Fut should be shorted on the closing below 5948.
However, incase this is a false move and a closing above 5980 is likely , the uptrend since June is likely to resume , leading to the extension of the rally!

Last week’s trading range (from February 11 – 15) was a whopping 11 points for the S&P 500. A candle chart visually expresses this performance with 5 candles called dojis.

What exactly is a doji and what does it mean for the market?

A doji candle is formed when the open and close are the same or very close to equal. The body (see “Anatomy of a Candle” chart) is narrow.

The upper and lower shadows vary depending on the type of doji (see second chart). All doji candles reflect a measure of equality between buyers and sellers and a period of indecision.

The Monday (February 18) Profit Radar Report included the following analysis (including S&P 500 chart) of dojis and periods of sideways trading:

“The market usually doesn’t give investors a whole lot of time to make the right decision (i.e. get out at the top), that’s why a cluster of dojis is rarely seen at significant highs.

The candle chart below highlights various doji clusters. Most of them (gray boxes) were followed by spikes higher. The red box, although not a ‘doji top,’ is one possible exception. Dojis tend to relieve overbought (or oversold) conditions and tend to provide more fuel for the next move.

Based on the market’s MO, a move above last week’s high (S&P 1,524.69), would likely result in another 10+ point rally.”

The Profit Radar Report is putting the dojis in short-term context with nearby support/resistance levels and in long-term context with an extensive 2013 market forecast.

The Art of Watching (July 2012) (Photo credit: skippyjon)

XJO meets a market cross-road

Arguably there is never a time when the market direction can be taken for granted.

However there are times when future market direction is more difficult to pick than usual.

The market reached such a cross-road intersection this past week with the XJO confronting important technical resistance  at 5000 for the third time.

With a corrective move long over-due, and the interim reporting season starting, one might well have thought that the index would turn lower back into the long-term trading range.

On the other hand there had been an extra-ordinarily strong bullish move of the index in two legs from July 2012. This impulsive move this week carried the index decisively through the 5000 barrier to 5054.3

• The first leg from 4000 to 4585, was 585 points over 16 weeks, at an average of 36.6 points/ week.
• Next there was a sharp sell-off over the following 4 weeks (Oct/Nov) of 247 points for a 42% retracement.
• The second leg since November has been even stronger, from 4334 to 5054, at an average of 60 points per week. Only one of the past 13 weeks has been negative.

Doji candlestick on Daily chart, warns of possible short-term trend change

Market uncertainty to continue this week

One cannot assume that the current trend higher will continue without pause.  In fact the short-term trend may be about to change.

The candlestick appearance for the last day of trading February 15 took the form of a Doji where the open was 5036.9, and the close just 3 points lower at 5033.9. This is often a harbinger of a corrective move, or at least of a pause in trending.

The RSI indicator has been in the over-bought zone for most of the past three months, and at market close was 80. This position is not sustainable for long.

There are also non-technical reasons to expect a pull-back.

• Some stocks such as CBA and CSL are at record highs; profit-taking could be expected.
• A number of stocks are due to go ex-dividend in the next week or two.
• The profit results of some stocks will inevitably disappoint the market
• Some analysts consider that further growth within the banking and retail sectors may be limited.

Even if there is a market correction in the next week or two, this is likely to be seen as a buying opportunity limiting the down-side to support at the 5000 or just below.

Weekly XJO still trending higher

Related articles

• Markets poised for correction (upi.com)
• Wall St. Week ahead: Stocks could struggle to extend winning streak (gulfnews.com)

Silver has broken below a very strong support after a long period of consolidation. The target is 54500 as an up trendline very close to the 54000 level.

I have chosen to check the charts for the Commonwealth Bank of Australia after it announced an outstanding profit report for the first half of the 2012-2013 financial year. The CBA is Australia‘s second largest company by market capitalization.

Highlights in the Profit Result

• Statutory Profit of $3661 million
• Cash NPAT $3780 million
• Return on Equity of 18.1%
• Cash earnings per share of 235.5c.
• Dividend in cents per share – 164c

Recent Technical Analysis Milestones

• The share price has been in an uptrend since the week of September 23 2011, when it was at a low of $42.30
• The uptrend appeared to have peaked  at $58.04 in the week of August 3 2012, nearly a year later.
• After retracing to $53.75 there has been an uninterrupted impulsive move higher to a high yesterday of $67.38. The close today was $66.90 (14th February 2013)
• Yesterday’s range with gapping was $1.98 or 3%

Assumptions

• There is likely to be a corrective move lower after such an extended impulsive move.
• The shares go ex-dividend next week and this is likely to start a retracement.
• The first levels of support seem to be $67.74 and then $61.36.
• The present uptrend would not be threatened until support is broken at $58.

Deductions

• If the uptrend remains intact higher prices would be expected
• From the Fibonacci extension levels, the present share price has penetrated the 50% mark.
• The next target is at $68, the 61.8% level.
• Should this be penetrated the last target is the 100% extension level at $74.

Conclusion

The share price of the Commonwealth Bank of Australia may well reach further records highs over the next twelve months. The overall market is bullish and the key 5000 technical level for the XJO has just been penetrated. If you are not fortunate enough to already own CBA shares, it may still not be too late.

Disclaimer:

This post is a personal view based on technical considerations only. Please do not rely on it in making your own decisions. See full disclaimer page.

Related articles

• CBA set to lift profit and dividends (news.theage.com.au)
• CBA profits from global economy’s ‘relative stability’ (abc.net.au)
• ASX passes 5,000 points on strong results (woodsg.wordpress.com)
• ?New Trend for Newcrest. Price rallies on 51% profit fall! (technicality.me)
• UPDATE 1-Commonwealth Bank of Australia posts H1 record cash profit (uk.reuters.com)

USDINR has given a inverted hammer formation with high volume. Thus if the price falls below the low of the hammer its bearish.

We observe a gap that dollar has given on the daily chart. Thus we anticipate this move to cover the gap till 53.45 levels

Its own restructuring efforts received a welcome boost when the government revised the anti-dumping rules in its favour Dec 4 2012.

The most recent media release January 14, 2013 announced rationalization changes to the Western Port Plant to cost $17 million, an amount the company anticipates it will recoup within 12 months.

English: Western Port, Victoria looking west from French Island, March 2005. Photo by Takver (www.takver.com) and released under the GNU FDL Category:Images of Victoria (Photo credit: Wikipedia)

Share consolidation

A 1 for 6 consolidation of its shares was completed on December 20, 2012

Since the reconstruction the share price has traded in a range between $3.35 and $3.77.

BSL to test trading range resistance at $3.80

A Technical Analysis view of  possible share-price movement in the near future

With the improvement in trading conditions it is likely that there will be further upwards re-rating of the share-price .

For this to happen the share-price must first break-out above $3.80 (a possible entry point) before testing the $4 barrier.

Should the share-price contrary to expectation fall, traders would look for the trading range support level to hold at $3.35.

A failure of support would be a signal for a stop-loss sale.

Rebound from intact support on the other hand would be an entry signal for a long position.

A long way to go!

The Weekly Chart shows the share price fell over an 18 month period from $12

(11/02/11) to $1.47 (27/07/12).  The Fibonacci retracement levels shown are not yet in contention. The next target in a further re-rating is resistance at $4.83.

Disclaimer

This analysis of the charts of Bluescope Steel is not a recommendation to buy or sell the shares. Do not rely on the opinions expressed in making your own decisions. See full Disclaimer page in the Menu above.

Related articles

• Govt to support BlueScope workers (news.com.au)
• BlueScope Will Cut Production, Jobs in Australia to Lower Costs – Bloomberg (bloomberg.com)