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GLOBAL EQUITY MARKETS-11/02/2017

February 11, 2017/4 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

This week’s update highlights 3 major technical developments. These themes can be seen in the TECHCHARTSWATCHLIST and TECHCHARTSALERT.

Russell 2000 Index is breaking out of its month-long flag continuation
EUROPE STOXX 600 index is preparing for a breakout from its short-term consolidation
HONG KONG & CHINA equities are gaining strength with clear breakout signals and breakout candidates

Russell 2000 index broke out of its month-long flag consolidation on Friday. The small-cap benchmark equity index should take out the minor high at 1,392 to add further momentum to the recent breakout. Outlook is positive for U.S. equities.

RUSSELL 2000 INDEX – DAILY SCALE

Europe’s STOXX 600 index remained range-bound and closed at the upper end of its month-long consolidation. Latest consolidation can be identified as a continuation flag. Breakout above 367 levels will confirm the bullish continuation chart pattern and suggest higher levels for the European equities in the coming weeks. This update features the iSHARES STOXX 600 ETF that is listed in Germany. The ETF has a similar technical outlook. The upper boundary of the month-long consolidation is at 36.73 levels for the Ishares STOXX 600 ETF.

EUROPE STOXX 600 – WEEKLY SCALE

ISHARES STOXX 600 ETF – WEEKLY SCALE

#TECHCHARTSWATCHLIST

HARBIN BANK (6138.HK)

A common chart pattern that is clearly visible on the Hong Kong/China banking & financial stocks is a multi-month H&S bottom reversal. HARBIN BANK is a Hong Kong based investment holding company. Price chart of the stock formed an 18 month-long H&S bottom with the strong horizontal resistance standing at 2.45 levels. The right shoulder of the multi-month H&S bottom took the form of a bullish flag. HARBIN BANK closed the week at the neckline of its multi-month H&S bottom. A daily close above 2.52 levels will confirm the breakout from the major base formation.

HARBIN BANK – WEEKLY SCALE

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (1398.HK)

ICBC – WEEKLY SCALE

CQRC BANK (3618.HK)

Chongqing Rural Commercial Bank is engaged in the provision of banking services and related financial services in China. Stock is listed on the Hong Kong stock exchange. Price chart of CQRC BANK formed a long-term base formation similar to other financial/bank stocks in Hong Kong. Multi-month H&S bottom has a horizontal resistance at 5.10 levels. A daily close above 5.25 levels will confirm the breakout. H&S bottom price target stands at 6.6 levels.

CQRC BANK – WEEKLY SCALE

BANK OF CHINA (3988.HK)

Last but not least BANK OF CHINA another Hong Kong listed banking stock forms a similar 16 month-long H&S bottom with a downward sloping neckline which is standing at 3.8 levels. A daily close above 3.88 levels will confirm the breakout from the multi-month bullish reversal. Chart pattern price target stands at 4.65 levels.

BANK OF CHINA – WEEKLY SCALE

CHINA MERCHANTS CHINA DIRECT INVESTMENTS LTD (0133.HK)

China Merchants China Direct Investments Limited is a Hong Kong-based investment holding company principally engaged in financial investment. Price chart of CHINA MERCHANTS formed a 9 month-long bullish ascending triangle with the horizontal resistance standing at 12.05 levels. This week’s close was at the chart pattern boundary. A daily close above 12.40 will confirm the breakout from the bullish continuation chart pattern with a possible price target of 14.

CHINA MERCHANTS – WEEKLY SCALE

LINGBAO GOLD (3330.HK)

Lingbao Gold Company Limited is principally engaged in the mining, processing, smelting and sales of gold and other metallic products in the People’s Republic of China (the PRC). The stock is listed on the Hong Kong stock exchange. Price chart formed a 5 month-long symmetrical triangle with the resistance at 1.98. A daily close above 2.04 levels will confirm the breakout from the continuation chart pattern.

LINGBAO GOLD – WEEKLY SCALE

APOLLO INVESTMENT CORP (AINV.O)

Apollo Investment Corporation is a closed-end, externally managed, non-diversified management investment company. It is listed on the Nasdaq Stock Exchange. Price chart formed a 4 month-long symmetrical triangle with the upper boundary standing at 6.20 levels. A daily close above 6.38 will confirm the breakout from the 4 month-long consolidation.

APOLLO INVESTMENT – WEEKLY SCALE

SPDR S&P INTERNATIONAL DIVIDEND ETF (DWX)

SPDR S&P INTERNATIONAL DIVIDEND ETF seeks to replicate as closely as possible, before expenses, the price and yield performance of an index that tracks exchange-listed common stocks domiciled in countries outside the United States that offer high dividend yields. The ETF is listed on the NYSE Arca. Price chart of DWX formed a 15 month-long ascending triangle with the strong horizontal resistance standing at 37.45 levels. Over the past 15 months the horizontal resistance was tested for 6 times. Ascending triangle is a bullish chart pattern and it can resolve as a major bottom reversal. A daily close above 38.20 will confirm the breakout from the multi-month consolidation. Ascending triangle price target stands at 45 levels.

SPDR S&P INTL DIV ETF – WEEKLY SCALE

There were 4 new breakouts this week that are moved from the TECHCHARTSWATCHILST to the TECHCHARTSALERT. Below are the stocks that completed their chart patterns.

#TECHCHARTSALERT

ZEPAK (ZEEP.WA)

Zespol Elektrowni Patnow Adamow Konin SA is a Poland based company engaged in the electricity sector. The stock is listed on the Warsaw Stock Exchange. Price chart formed a 7 month-long ascending triangle with the strong horizontal resistance standing at 14.15 levels. This week’s price action cleared the strong resistance. While the ascending triangle price target stands at 18 levels, strong weekly breakout could be the beginning of a larger scale uptrend that can carry the price towards 20-25 area.

ZEPAK – WEEKLY SCALE

CHINA TAIPING INSURANCE (0966.HK)

China Taiping Insurance Holdings Company Limited is a Hong Kong-based investment holding company principally engaged in insurance businesses. Price chart completed a year-long H&S bottom with a daily close above 18.75 levels. Strong horizontal resistance was at 18.20 levels. H&S bottom price target stands at 22.5 levels.

CHINA TAIPING – WEEKLY SCALE

CHINA COMMUNICATIONS CONSTRUCTION (1800.HK)

CHINA COMM CONS. is an industrial company listed on the Hong Kong Stock Exchange. The company is engaged in the infrastructure construction of ports, roads, bridges and railways. The price chart formed a text-book symmetrical triangle. Symmetrical triangles are usually considered to be continuation chart patterns. This week’s strong price action and a close above 9.65 levels confirmed the breakout with a possible chart pattern price target of 12 levels.

CHINA COMM CONS – WEEKLY SCALE

INTERFOR CORPORATION (IFP.TO)

Interfor Corporation, formerly International Forest Products Limited, is a Canada-based supplier of lumber products. The Company operates through solid wood segment. The Company offers lumber products to customers in North America, the Asia-Pacific region and Europe. Price chart completed a 5 month-long rectangle continuation chart pattern with a possible price target of 18.5 levels. Strong weekly price action can be the beginning of a larger scale uptrend.

INTERFOR CORPORATION – WEEKLY SCALE

GLOBAL EQUITY MARKETS-04/02/2017

February 4, 2017/2 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

A volatile trading week finished with a strong close on Friday for most of the global equity indices. Russell 2000 index serves as a benchmark for small-cap stocks in the United States. With Friday’s strong close, once again the index reached the upper boundary of its tight consolidation range. Breakout on Russell 2000 index could bode well for the equity market performance in the coming weeks. Strong short-term resistance stands at 1,385 levels.

RUSSELL 2000 INDEX – DAILY SCALE

European equities hold on to their gains following the strong breakout in late 2016. STOXX 600 index cleared the 350 levels with a strong weekly bar in December 2016 and completed a year-long base formation. Over the past month, the STOXX 600 index remained in a tight range between 360 and 367 levels possibly forming a bullish flag. A flag is usually considered a pause in a trend period and classified as a continuation chart pattern. Breakout above 367 levels should resume the uptrend in the European equities.

EURO STOXX 600 – WEEKLY SCALE

EURO STOXX 600 – MONTHLY SCALE

I shared several updates on the Turkish equities both on twitter and on the Tech Charts blog. As I go through several charts every week, I look for price action with well-defined boundaries, preferably forming an identifiable and mature chart pattern. Breakouts from these type of chart setups usually yield strong trend periods in the direction of the breakout. Turkey’s BIST 100 equity benchmark index is one of the best looking chart setup in the Emerging Market opportunity set. Breakout from the 3 year-long symmetrical triangle can result in a strong uptrend targeting 121K levels. Turkey BIST 100 index is setting up for a breakout that could result in a multi-month trend.

TURKEY BIST 100 INDEX – MONTHLY SCALE

Several great chart setups made it to the #TECHCHARTSWATCHLIST this week from Asia, Europe and the U.S. The length of the identifiable chart patterns range from minimum 4 months to maximum 2 years. I prefer those chart patterns with horizontal boundaries but also pay close attention to mature symmetrical triangles. Head and shoulder tops/bottoms, rectangles and ascending/descending triangles are the classic chart patterns with horizontal boundaries.

MAXITRANS INDUSTRIES (MXI.AX)

MAXITRANS INDUSTRIES is a small-cap stock listed on the Australia Stock Exchange. The company is engaged in the design, manufacture, sale, service and repair of transport equipment and related components, and spare parts. Price chart formed a 2 year-long complex H&S bottom with the strong horizontal resistance standing at 0.645 levels. A daily close above 0.665 levels will confirm the breakout from the bullish reversal chart pattern with a possible price target of 0.90. Stock is testing the horizontal resistance for the 5th time over the past 2 years.

MAXITRANS – WEEKLY SCALE

SOFINA SA (SOF.BR)

SOFINA is a Belgium-based holding company that invests, directly and indirectly, in companies from various sectors. Price chart formed a 5 month-long rectangle with the resistance standing at 128.75 levels. Stock is going through a historical low volatility period and usually breakouts from these type of conditions result in strong price action. A daily close above 131 levels will confirm the breakout from the bullish continuation chart pattern.

SOFINA – WEEKLY SCALE

888 HOLDINGS (888.L)

888 Holdings Public Limited Company is a provider of online gaming entertainment and solutions. The company is listed on the London Stock Exchange. Price chart of 888 Holdings formed a year-long rectangle with the strong horizontal resistance at 233.5 levels. This week’s strong weekly close breached the horizontal resistance. Edwards and Magee in their book Technical Analysis of Stock Trends suggest that a stock should breakout by a min 3% margin above the resistance for a clear chart pattern breakout signal. According to this guideline, a daily close above 240.65 levels will confirm the breakout from the year-long rectangle. Rectangle chart pattern price target stands at 280 levels.

888 HOLDINGS – WEEKLY SCALE

ENTERTAINMENT ONE LTD. (ETO.L)

Entertainment One Ltd. is an independent entertainment company listed on the London Stock Exchange. The Company is focused on the acquisition, production and distribution of television, family, film and music content rights across all media across the world. Price chart formed a 5 month-long symmetrical triangle that should breakout soon. A daily close above 250 levels will confirm the breakout from the tight consolidation range and possibly target 305 levels.

ENTERTAINMENT ONE – WEEKLY SCALE

KURA CORP (2695.T)

KURA CORP is a consumer cyclical company listed on the Tokyo Stock Exchange. Price chart of KURA CORP formed a year-long H&S top, a bearish reversal chart pattern. The strong horizontal support stands at 4,560 levels. The support was tested for 5 times over the past year. A daily close below 4,425 levels will confirm the bearish reversal chart pattern with a possible price target of 3,000. The symmetry between the shoulders and also several tests of the horizontal support makes this a text-book H&S top.

KURA CORP – WEEKLY SCALE

FLEXSHARES INTERNATIONAL QUALITY DIVIDEND INDEX FUND (IQDF.K)

The Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust International Quality Dividend Index. The underlying index is designed to provide exposure to a high-quality, income-oriented portfolio of international equity securities. It’s geographical focus is global ex U.S. The fund is listed by NYSE Arca. Price chart formed a 16 month-long H&S bottom or possibly an ascending triangle that could act as a bottom reversal. The strong horizontal resistance stands at 23.35 levels. A daily close above 23.75 levels will confirm the breakout from the multi-month base formation with a possible price target of 27 levels.

FLX INTL DEF – WEEKLY SCALE

BOYD GAMING (BYD)

Boyd Gaming Corporation is a multi-jurisdictional gaming company. The company is listed on the NYSE. Price chart formed a year-long ascending triangle with the strong horizontal boundary standing at 21.30 levels. Ascending triangle is considered to be a bullish continuation chart pattern. A daily close above 21.95 levels will confirm the breakout after the 5th test of the upper boundary over the past year. Price target for the ascending triangle stands at 28 levels.

BOYD GAMING – WEEKLY SCALE

SPDR S&P BIOTECH ETF (XBI)

The Fund seeks to replicate as closely as possible the performance of an index derived from the biotechnology segment of a U.S. total market composite index. The Fund uses a passive management strategy designed to track the total return performance of the S&P Biotechnology Select Industry Index. SPDR S&P BIOTECH ETF is listed on the NYSE. Price chart formed a 4 month-long symmetrical triangle with the upper boundary at 66 levels acting as resistance. A daily close above 67.35 levels will confirm the breakout from the sideways consolidation.

SPDR S&P BIOTECH ETF -WEEKLY SCALE

MULTIPOLAR TBK (MLPL.JK)

PT Multipolar Tbk is an Indonesia-based investment holding company. The company is listed on the Jakarta Stock Exchange. Price chart formed a 9 month-long symmetrical triangle following a sharp rise in the first quarter of 2016. The upper boundary of the symmetrical triangle stands at 406 levels. A daily close above 418 levels will confirm the breakout from the consolidation range and suggest higher levels for the stock in the coming weeks.

MULTIPOLAR TBK – WEEKLY SCALE

Breakouts from bullish chart patterns to all time high levels are signals a trader can’t ignore. Breakout to all time high level means that the stock doesn’t have any resistance ahead. Completion of a bullish chart pattern itself is a positive technical signal. There has been two chart pattern breakout signals that met the above conditions and made it to the #TECHCHARTSALERT this week.

SJR IN SCANDINAVIA AB (SJRb.ST)

SJR is a small-cap Sweden-based staff recruitment company primarily focusing on the economic, banking and financial sectors. Price chart completed a 2 year-long rectangle followed by the breakout from the short-term 4 month-long rectangle. SJR IN SCANDINAVIA is at all-time high levels. Possible price target for the rectangle chart pattern stands at 48 levels.

SJR – WEEKLY SCALE

CINEWORLD GROUP (CINE.L)

CINEWORLD GROUP is a consumer cyclical company listed on the London Stock Exchange. Price chart completed a 16 month-long cup & handle chart pattern and broke out to all-time high levels. Cup & handle is a bullish continuation chart pattern and has a possible price target of 720 levels.

CINEWORLD GROUP – WEEKLY SCALE

TURKIYE VAKIFLAR BANKASI (VAKBN.IS)

Turkiye Vakiflar Bankasi TAO (Vakifbank) is a Turkey-based commercial bank. The company is listed on the Istanbul Stock Exchange. Price chart completed a 3 year-long symmetrical triangle followed by a medium-term 9 month-long symmetrical triangle. These are clearly bullish signals for the stock. Possible price target for the 9 month-long symmetrical triangle stands at 6 levels.

VAKIF BANK – WEEKLY SCALE

GLOBAL EQUITY MARKETS-28/01/2017

January 28, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

This week’s major financial event was the Dow Jones Industrial Average breaking the technical and psychological level at 20,000. Following the strong rally in November-December 2016, the index completed a month-long bullish flag with a gap opening. These are all positive technical developments for the equity markets. While the DJIA cleared its month-long resistance, RUSSELL 2000, a small-cap market index is still below the technical resistance at 1,385 levels. A possible breakout on the RUSSELL 2000 index in the following days/week should add momentum to the equity markets. Meanwhile the DJIA should hold above 19,920-20,000 range if we were to expect continued strength.

DJIA – WEEKLY SCALE

RUSSELL 2000 IND – WEEKLY SCALE

There has been several chart pattern breakout signals this week as well as new additions to the TECHCHARTSWATCHLIST. As I go through thousands of charts every week, I look for chart patterns that have well-defined horizontal boundaries. Most of the chart patterns range from minimum 4 months to maximum 2 years. Below are the new additions to the TECHCHARTSWATCHLIST.

#TECHCHARTSWATCHLIST

SJR IN SCANDINAVIA AB (SJRb.ST)

SJR is a small-cap Sweden-based staff recruitment company primarily focusing on the economic, banking and financial sectors. Price chart of SJR formed a 2 year-long rectangle chart pattern with the strong horizontal boundary standing at 39.25 levels. Over the past 4 months, the stock formed another short-term consolidation and with this week’s price action it cleared both resistances. Edwards and Magee in their book Technical Analysis of Stock Trends suggest that a stock should breakout by a min 3% margin above the resistance for a clear chart pattern breakout signal. According to this guideline, a daily close above 40.45 will confirm the breakout from the 2 year-long rectangle.

SJR – WEEKLY SCALE

HARBIN BANK (6138.HK)

A common chart pattern that is clearly visible on the Hong Kong/China banking & financial stocks is a multi-month H&S bottom reversal. HARBIN BANK is a Hong Kong based investment holding company. Price chart of the stock formed an 18 month-long H&S bottom with the strong horizontal resistance standing at 2.45 levels. The right shoulder of the multi-month H&S bottom took the form of a bullish flag. While there is still room for the chart pattern breakout signal on the H&S Bottom, an initial breakout signal will be triggered with the possible breakout of the 5 month-long flag. Flags are considered to be bullish continuation and H&S bottoms are major bottom reversal chart patterns. These are two positive technical chart developments for the stock. A breakout is required for confirmation.

HARBIN BANK – WEEKLY SCALE

INDUSTRIAL AND COMMERCIAL BANK OF CHINA (1398.HK)

ICBC is principally involved in the provision of banking and related financial services. It is listed on the Hong Kong Stock Exchange. Similar to several banking and financial stocks listed on the Hong Kong Stock Exchange, ICBC is also forming a multi-month H&S bottom with the strong horizontal resistance standing at 5.15 levels. Over the past 5 months the stock formed a symmetrical triangle that can act as a continuation chart pattern. The upper boundary of this shorter term chart pattern stands at 4.85 levels. Breakout from the 5 month-long symmetrical triangle can act as an early signal for a possible larger scale bullish development.

ICBC – WEEKLY SCALE

TURQUOISE HILL RESOURCES (TRQ)

TURQUOISE HILL RESOURCES is an international mining company. The chart below shows the price on the NYSE. Price chart formed a 6 month-long cup & handle chart pattern with the strong horizontal resistance standing at 3.65 levels. Over the past 6 months the stock tested the 3.65 levels for three times. Cup & handle is considered to be a bullish continuation chart pattern. A daily close above 3.75 levels will confirm the breakout from the bullish chart pattern with a possible price target of 4.5 levels.

TURQUS HL RSC – WEEKLY SCALE

CANADIAN PACIFIC RAILWAY (CP)

CANADIAN PACIFIC RAILWAY LTD. together with its subsidiaries, operates a transcontinental railway in Canada and the United States. The chart below shows the price on the NYSE. Price chart of CANADIAN PACIFIC formed a 4 month-long rectangle with the strong horizontal resistance standing at 156.7 levels. If the 4 month-long rectangle acts as a continuation chart pattern, breakout above 156.7 levels can also complete a multi-month base formation that could possibly start a larger scale uptrend. A daily close above 161 levels will confirm the breakout from the rectangle chart pattern.

CANADIAN PACIFIC – WEEKLY SCALE

ZEPAK (ZEEP.WA)

Zespol Elektrowni Patnow Adamow Konin SA is a Poland based company engaged in the electricity sector. The stock is listed on the Warsaw Stock Exchange. Price chart formed a 7 month-long ascending triangle with the strong horizontal resistance standing at 14.15 levels. This week the stock tested the upper boundary of the bullish continuation chart pattern for the 4th time. A daily close above 14.70 levels will confirm the breakout from the 7 month-long ascending triangle with a possible price target of 18.

ZEPAK – WEEKLY SCALE

SANLAM (SLMJ.J)

SANLAM LIMITED is a South Africa-based holding company. The Company provides solutions, which include life insurance; general insurance; investment management (including retail savings, asset management and wealth management); credit and structuring, and administration, health and other (such as estate planning, trusts, wills, and lending and health management). Price chart formed a 9 month-long symmetrical triangle with the upper boundary standing at 6,865 levels. This week’s price action marked the 3rd test of the upper boundary. A daily close above 7,070 levels can confirm the 9 month-long symmetrical triangle as a bullish continuation chart pattern with a possible price target of 8,240.

SANLAM – WEEKLY SCALE

PTC INDIA FINANCIAL SERVICES (PTCN.BO)

PTC India Financial Services Limited is an infrastructure finance company. The Company provides financial services to the entities in energy value chain. Price chart of PTC INDIA formed a 9 month-long rectangle. Rectangle chart pattern can act as a bullish continuation. The upper boundary of the rectangle stands at 42.75 and this week’s price action managed to closed above that level. A daily close above 44 levels will confirm the breakout from the multi-month sideways consolidation. Rectangle chart pattern price target stands at 50.

PTC INDIA – WEEKLY SCALE

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#TECHCHARTSALERT

DAIRY FARM INTERNATIONAL HOLDINGS (DAIR.SI)

A TECHCHARTSALERT was issued on Monday with the strong breakout on DAIRY FARM, listed in Singapore Stock Exchange. Breakouts from well-defined and tight consolidation ranges can result in sharp price action. This was the case for DAIRY FARM. Following its breakout, the stock reached its rectangle chart pattern price target in a matter of a week.

#SINGAPORE A new chart pattern breakout signal triggered on DAIRY FARM with the completion of 5 month-long rectangle. #TECHCHARTSALERT pic.twitter.com/voCr20H2BX

— Aksel Kibar, CMT (@TechCharts) January 23, 2017

DAIRY FARM – DAILY SCALE

DAIRY FARM – WEEKLY SCALE

SINGAPORE STRAITS TIMES INDEX (.STI)

SINGAPORE’S equity benchmark index completed a 9 month-long ascending triangle with the breakout above 2,965 levels. After a week of pullback and a re-test of the horizontal support, the index resumed its uptrend. Ascending triangle price target stands at 3,200 levels.

STI – WEEKLY SCALE

TAMBURI INVESTMENT PARTNERS (TIP.MI)

TAMBURI is a financial company listed on the Milan Stock Exchange. This week’s price action completed a 20 month-long H&S continuation chart pattern. While the stock closed well below its weekly highs, this could possibly be an intra-week pullback to the broken horizontal resistance at 3.75. Stock should remain above 3.75 for the bullish outlook to remain intact.

TAMBURI – WEEKLY SCALE

FIRST TRACTOR (0038.HK)

First Tractor Company Limited is principally engaged in the manufacture and sale of machinery products. This week’s breakout completed a year-long H&S bottom and also a 5 month-long symmetrical triangle. H&S bottom price target stands at 5.4 levels. Stock should hold above 4.60 levels for the bullish outlook to remain intact.

FIRST TRACTOR – DAILY SCALE

FIRST TRACTOR – WEEKLY SCALE

LIBERTY INTERACTIVE CORP. (LVNTA.O)

LIBERTY INTERACTIVE CORP. is a consumer cyclical company listed on the NASDAQ. The company owns interests in subsidiaries and other companies that are engaged in the video and digital commerce industries. This week’s strong breakout completed a 20 month-long H&S continuation chart pattern with the price target of 50.85. Stock should hold above 41.15 levels for the bullish outlook to remain intact.

LIBERTY INTERACTIVE – WEEKLY SCALE

GLOBAL EQUITY MARKETS-21/01/2017

January 21, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

Every week I post the latest additions to the #TECHCHARTSWATCHLIST. Stocks that qualify to the watch list are those that have well-defined and mature chart patterns that are likely to resolve in a strong directional movement. Stocks that breakout from those well-defined chart patterns are brought to your attention under the #TECHCHARTSALERT. Both the watch list and the alerts are covered in this weekly update. As usual there are several great chart setups in this week’s update both from Developed and Emerging markets.

#TECHCHARTSWATCHLIST

DICKERDATA FPO (DDR.AX)

DICKER DATA LTD. is a small cap technology company listed on the Australian Stock Exchange. The company is engaged in the wholesale distribution of computer hardware, software and related products. Price chart of DICKERDATA formed a 4 month-long rectangle. This week’s price action pushed the stock from the lower boundary of its range to the upper boundary. A daily close above 2.47 will confirm the breakout from the bullish continuation chart pattern. Breakout will also push the stock to all-time high levels.

DICKERDATA – WEEKLY SCALE

CINEWORLD GROUP (CINE.L)

CINEWORLD GROUP is a consumer cyclical company listed in the UK. The stock price formed a text-book cup & handle chart pattern. Cup & handle is considered to be a bullish continuation chart pattern. The horizontal boundary stands at 600 level. Breakout from the 16 month-long consolidation can target 720 levels. A daily close above 618 levels will confirm the breakout from the well-defined chart pattern. Breakout will also push the stock to all-time high levels.

CINEWORLD – WEEKLY SCALE

TAMBURI INVESTMENT PARTNERS (TIP.MI)

TAMBURI is a financial company listed on the Milan Stock Exchange. The company provides services of investment banking and advisory in corporate finance transactions. The stock price formed a 20 month-long H&S continuation chart pattern with the horizontal boundary standing at 3.75 levels. H&S continuation chart pattern price target stands at 4.8 levels. A daily close above 3.85 levels will confirm the breakout from the multi-month consolidation and push the stock to all-time high levels.

TAMBURI – WEEKLY SCALE

LIBERTY INTERACTIVE CORP. (LVNTA.O)

LIBERTY INTERACTIVE CORP. is a consumer cyclical company listed on the NASDAQ. The company owns interests in subsidiaries and other companies that are engaged in the video and digital commerce industries. The stock price formed a 20 month-long H&S continuation chart pattern with the strong horizontal resistance standing at 41.15 levels. H&S continuation chart pattern price target stands at 50.85 levels. A daily close above 42.40 will confirm the breakout from the multi-month consolidation and push the stock to all time high levels.

LIBERTY INTERACTIVE – WEEKLY SCALE

ANDRITZ AG (ANDR.VI)

ANDRITZ is an industrial company listed in the Vienna Stock Exchange. The stock price formed a year-long ascending triangle with the strong horizontal boundary standing at 49.75 levels. The ascending triangle can act as a bottom reversal. A daily close above 50.75 will confirm the breakout from the multi-month consolidation.

ANDRITZ – WEEKLY SCALE

CHINA COMMUNICATIONS CONSTRUCTION (1800.HK)

CHINA COMM CONS. is an industrial company listed on the Hong Kong Stock Exchange. The company is engaged in the infrastructure construction of ports, roads, bridges and railways. The price chart formed a text-book symmetrical triangle. Symmetrical triangles are usually considered to be continuation chart patterns. The upper boundary of the 8 month-long symmetrical triangle was breached this week with a close at 9.40 levels. I will be looking for a daily close above 9.75 levels to confirm the breakout.

CHINA COMM CONS – WEEKLY SCALE

SINOMA (1893.HK)

CHINA NATIONAL MATERIALS is basic materials company listed on the Hong Kong Stock Exchange. The company is engaged in the provision of cement equipment and engineering services, the production and sales of cement and high-tech materials. While there is still room for the price chart to complete the symmetrical triangle, I thought it is interesting to share these two similar chart patterns in Hong Kong operating in related industries. The 8 month-long symmetrical triangle has resistance at 2.0 levels.

SINOMA – WEEKLY SCALE

ADIRA FINANCE (ADMF.JK)

ADIRA FINANCE is a financial company listed on Jakarta Stock Exchange. Stock price formed a 5 month-long rectangle continuation chart pattern. Strong horizontal resistance was tested for 5 times over the past 5 months. Resistance stands at 6,700 levels. A daily close above 6,900 will confirm the breakout from the sideways consolidation.

ADIRA FINANCE – WEEKLY SCALE

SALIM IVOMAS PRATAMA (SIMP.JK)

SALIM IVOMAS is a consumer non-cyclical company listed on the Jakarta Stock Exchange. Stock price formed a 9 month-long symmetrical triangle. This week’s price action reversed from the upper boundary of the sideways consolidation at 535 levels. A daily close above 555 levels will confirm the breakout from the bullish continuation chart pattern.

SALIM IVOMAS – WEEKLY SCALE

#TECHCHARTSALERT

FORMPIPE (FPIP.ST)

FORMPIPE had a strong breakout during the week. Breakout was confirmed with a daily close above 10 levels. Strong price action not only cleared the 16 month-long resistance for the ascending triangle but also the multi-year resistance for the massive symmetrical triangle as can be seen on the monthly scale chart below.

FORMPIPE – WEEKLY SCALE

FORMPIPE – MONTHLY SCALE

ASTRAL FOODS (ARLJ.J)

ASTRAL FOODS listed on the Johannesburg Stock Exchange had a strong breakout during the week. Strong weekly close completed the 8 month-long rectangle chart pattern. Price target for the bullish continuation chart pattern stands at 16,000 levels. 13,750 should act as support in the following weeks.

ASTRAL FOODS – WEEKLY SCALE

NETFLIX (NFLX.O)

Following its positive earnings this week, NETFLIX completed a year-long rectangle chart pattern. Price should remain above 129.35 levels in the following weeks for the bullish interpretation to remain intact. Rectangle chart pattern price target stands at 175 levels.

NETFLIX – WEEKLY SCALE

DJIA, RUSSELL 2000, ACWI

January 14, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

This was another strong week for global equities. Both MSCI ALL COUNTRIES WORLD INDEX and MSCI EMERGING MARKETS INDEX finished the week with strong weekly candlesticks, opening at the lower end and closing at the highest level for the week.

ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O)

The MSCI ACWI captures large and mid cap representation across 23 developed markets and 23 emerging markets countries. With 2,486 constituents, the index covers approximately 85% of the global investable equity opportunity set. The iShares MSCI ACWI ETF seeks to track the investment results of the MSCI ACWI. The ETF is listed in the NYSE. Price chart of the iShares MSCI ACWI ETF shows the strong uptrend that started in the beginning of 2016. Year-long upward sloping trend line will act as support between 59 and 59.50 area. Until the long-term trend line is violated we should expect higher levels for the global equity benchmark.

ISHARES ACWI ETF – WEEKLY SCALE

ISHARES MSCI EMERGING MARKETS ETF (EEM)

ISHARES MSCI EMERGING MARKETS ETF had a strong week. Over the past three weeks strength in the emerging markets pushed the NYSE listed iShares MSCI EM ETF from 34 levels to 36.68 levels. Last week’s price action possibly completed a double bottom. If EEM manages to hold above 36.40 levels in the following weeks, next price target could be the September 2016 high at 38.20 levels.

ISHARES EM ETF – WEEKLY SCALE

DJIA & RUSSELL 2000 INDEX (.DJI & .RUT)

Almost everyone who follows the financial news network must have come across the 20,000 level for the Dow Jones Industrial Average. Below chart shows the significance of the 20,000 level from a technical perspective. 20,000 has now become a short-term technical resistance other than a psychological one. Similar chart development can be seen on the Russell 2000 index. Both indices formed month-long flag consolidations. For Russell 2000, the short-term resistance stands at 1,390 levels. Flags are bullish continuation chart patterns.

DJIA – DAILY SCALE

RUSSELL 2000 INDEX – DAILY SCALE

#TECHCHARTSALERT

Below are the charts that generated chart pattern breakout signals during this week.

VOLKSWAGEN AG (VOWG.DE)

VOLKSWAGEN had a strong weekly close and the stock cleared the year-long horizontal resistance at 144.50 levels. Breakout above the horizontal resistance possibly completed a year-long ascending triangle that can act as a bottom reversal. Price target for the bullish chart pattern stands at 178 levels. 144.50 should act as support.

VOLKSWAGEN – WEEKLY

SANCHEZ ENERGY CORP. (SN)

SANCHEZ ENERGY completed an 8 month-long rectangle continuation chart pattern with the strong weekly breakout. Rectangle price target stands at 13.60 levels. 9.55 should act as support.

SANCHEZ ENERGY – WEEKLY SCALE

FAURECIA (EPED.PA)

FAURECIA after its 4th test, cleared a year-long horizontal resistance and completed an ascending triangle that can act as a bottom reversal. Ascending triangle price target stands at 47 levels. 37.30 levels should act as support.

FAURECIA – WEEKLY SCALE

DUBAI FINANCIAL MARKET GENERAL INDEX (.DFMGI)

UAE’S DUBAI FINANCIAL MARKET GENERAL INDEX completed a 9 month-long rectangle chart pattern with the strong weekly close above 3,620 levels. Strong horizontal resistance was tested for 4 times over the past 9 months. Rectangle chart pattern price target stands at 4,040 levels. 3,620 levels should act as support.

DFMGI – WEEKLY SCALE

#TECHCHARTSWATCHLIST

Below are the charts that are added to the TECH CHARTS WATCHLIST.

888 HOLDINGS (888.L)

888 HOLDINGS is a provider of online gaming entertainment and solutions. The stock is listed in the UK. Price chart of the 888 HOLDINGS formed a year-long rectangle with the strong resistance standing at 233.5 levels. Stock had a strong breakout in the first quarter of 2016 and since then the price has been in a sideways consolidation. According to Edwards and Magee 3% breakout guideline, for confirmation of the breakout price should close above 240.65 levels.

888 HOLDINGS – WEEKLY SCALE

BOOKER GROUP (BOK.L)

BOOKER GROUP is a consumer non-cyclical company listed in the UK. The company offers a range of grocery, tobacco, alcoholic products and other products. Price chart of BOOKER GROUP formed a year-long ascending triangle. Strong horizontal resistance stands at 187.5 levels. The horizontal boundary was tested for 4 times over the past year. Breakout above 187.5 can push the stock to all-time high levels. A daily close above 194 levels is required for confirmation.

BOOKER GROUP – WEEKLY SCALE

CSPC PHARMA (1093.HK)

CSPC PHARMACEUTICAL GROUP is a healthcare company listed in the Hong Kong Stock exchange. Stock price formed a 2 year-long rectangle with the strong horizontal resistance standing at 8.60 levels. Latest consolidation below the upper boundary of the rectangle can be a preparation for an upward breakout. A daily close above 8.85 levels will confirm the breakout from this massive sideways consolidation. It is important to note that the breakout will push the stock to all-time high levels.

CSPC PHARMA – WEEKLY SCALE

CGI GROUP (GIB)

CGI GROUP is a technology company listed in the NYSE. Stock price formed an 8 month-long ascending triangle with the strong horizontal resistance standing at 50.20 levels. Over the past 8 months CGI GROUP tested 50-50.2 area for six times. Breakout above 50.20 levels will push the stock to all-time high levels. A daily close above 51.70 levels will confirm the breakout from the bullish continuation chart pattern.

CGI GROUP – WEEKLY SCALE

OWENS-ILLINOIS INC (OI)

OWENS ILLINOIS INC is a basic materials company listed in the NYSE. The company is engaged in the manufacturing of glass containers. Stock price of OWENS ILLINOIS formed a 7 month-long symmetrical triangle with the upper boundary standing at 19.70 levels. Symmetrical triangles are usually considered continuation chart patterns. A daily close above 20.10 levels will confirm the breakout from the symmetrical triangle.

OWENS ILLINOIS – WEEKLY SCALE

NH INVESTMENT & SECURITIES CO (005940.KS)

NH INVESTMENT & SECURITIES CO, formerly WOORI INVESTMENT & SECURITIES CO, is a Korea-based financial service provider specialized in the investment banking and securities markets. The stock price of the company formed a massive year-long complex head and shoulder bottom with the neckline standing at 10,860 levels. Strong horizontal resistance was tested for 4 times over the past year. Breakout above 10,860 can complete the long-term bottom and suggest higher prices in 2017. A daily close above 11,185 levels will confirm the breakout.

NH INVEST & SEC – WEEKLY SCALE

UK FTSE, ACWI, NETFLIX, VOLKSWAGEN

January 7, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

In the first week of the new year global equities had renewed strength. In the first half of December 2016, benchmark for the global equities, ISHARES MSCI ACWI had a strong breakout which was followed by three weeks of pullback. Price action in the first week of January pushed ISHARES MSCI ALL COUNTRIES WORLD INDEX to December 2016 highs suggesting the continuation of the uptrend in the following weeks.

ISH ACWI ETF – WEEKLY SCALE

ISHARES GLOBAL INDUSTRIALS ETF (EXI)

ISHARES GLOBAL INDUSTRIALS ETF that broke out of 2 year-long consolidation in the beginning of December 2016 and possibly completed its pullback to its horizontal support at 74.80 levels. This week’s long white candle also shows the renewed strength in the global industrial equities. EXI is an ETF listed in the NYSE.

EXI – WEEKLY SCALE

UK FTSE 100 INDEX (.FTSE)

UK FTSE 100 INDEX is setting up for a breakout to all-time high levels. Given the multi-decade long consolidation below 6,950 levels, breakout to all-time high levels above the horizontal resistance can be extremely positive for UK equities.

UK FTSE 100 – QUARTERLY SCALE

SUPERGROUP (SGP.L)

SUPERGROUP is a consumer cyclical company listed in the UK. The monthly scale long-term chart shows the strong 6 year-long horizontal resistance at 1705 levels. Strength in the UK FTSE index can result in similar breakouts in UK listed equities. Breakout to all-time highs for SUPERGROUP can be followed by multi-month uptrend.

SUPERGROUP – MONTHLY SCALE

SMITH DS (SMDS.L)

DS SMITH PLC is a basic materials company listed in the UK. The stock formed a 16 month-long H&S continuation chart pattern with the strong resistance at 425 levels. Breakout above 425 levels will push the stock to all-time highs. A daily close above 436 levels will confirm the breakout from multi-year continuation chart pattern.

DS SMITH – WEEKLY SCALE

ANDRITZ (ANDR.VI)

ANDRITZ is an industrial company listed in Austria Vienna Stock Exchange. 3 month-long rectangle chart pattern can act as a launching pattern for the year-long symmetrical triangle. Breakout from the 3 month-long rectangle can result in the completion of the year-long symmetrical triangle. A daily close above 50.50 levels will confirm the breakout from the lengthy sideways consolidation.

ANDRITZ – WEEKLY SCALE

GENMAB (GEN.CO)

GENMAB is a healthcare company listed in Denmark. Stock formed a 5 month-long rectangle with the upper boundary standing at 1300 levels. Earlier in November 2016, the stock violated the upper boundary. This was possibly a premature breakout which should be followed by the eventual confirmed breakout. A daily close above 1340 levels will confirm the breakout from the 5 month-long sideways consolidation with a possible price target of 1580 levels.

GENMAB – WEEKLY SCALE

PLASTIC OMNIUM (PLOF.PA)

PLASTIC OMNIUM is a consumer cyclical company listed in France. Stock formed a year-long rectangle with the strong horizontal resistance standing at 31 levels. Breakout above 31 levels will push the stock to all-time high levels. Breakouts from horizontal consolidation ranges to all-time high levels are usually followed by increased momentum. A daily close above 32 levels will confirm the breakout from the continuation chart pattern. Rectangle price target stands at 36.70 levels.

PLASTIC OMNIUM – WEEKLY SCALE

FORMPIPE (FPIP.ST)

FORMPIPE is a technology company listed in Sweden. Stock formed a 16 month-long ascending triangle with the strong horizontal resistance at 9.75 levels. This week’s price action violated the boundary line but the weekly close was below the resistance. A daily close above 10 levels will confirm the breakout from the bullish continuation chart pattern. Ascending triangle price target stands at 12 levels.

FORMPIPE – WEEKLY SCALE

GOLDWIND (2208.HK)

GOLDWIND is an energy company listed in Hong Kong. Stock price formed 8 month-long rectangle chart pattern with the horizontal boundary standing at 13 levels. A daily close above 13.40 levels will confirm the breakout from the continuation chart pattern. Rectangle chart pattern price target stands at 16 levels.

GOLDWIND – WEEKLY SCALE

NETFLIX (NFLX.O)

NETFLIX is a consumer non-cyclical company listed in NASDAQ. Stock formed a year-long rectangle with the horizontal resistance standing at 129.35 levels. This week’s price action was the 4th test of the horizontal boundary. Breakout from the long-term bullish continuation chart pattern can result in another strong trend period for NETFLIX. A daily close above 134 levels will confirm the breakout. Rectangle price target stands at 172 levels.

NETFLIX – WEEKLY SCALE

VOLKSWAGEN (VOWG.DE)

VOLKSWAGEN is a consumer cyclical company listed in Germany. Stock formed a year-long ascending triangle that could act as a possible trend reversal. Breakout above the horizontal boundary at 145 levels can fill the gap between 145-160 area. A daily close above 148 levels will confirm the breakout from the year-long ascending triangle. Chart pattern price target stands at 180 levels.

VOLKSWAGEN – WEEKLY SCALE

FAURECIA (EPED.PA)

FAURECIA is a consumer cyclical company listed in France. Stock formed a year-long ascending triangle that could act as a reversal. This week’s price action breached the horizontal boundary at 37.30 levels. A daily close above 38.40 levels will confirm the breakout. Chart pattern price target stands at 46.5 levels.

FAURECIA – WEEKLY SCALE

CHINA COMM CONSTRUCTION (1800.HK)

CHINA COMMUNICATIONS CONSTRUCTION is an industrial company listed in Hong Kong. Stock formed an 8 month-long symmetrical triangle continuation chart pattern. Breakout above 9.35 can complete the text book bullish continuation chart pattern with a possible price target of 12.

CHINA COMM CONS – WEEKLY SCALE

UAE, RUSSIA, TURKEY, POLAND

December 31, 2016/2 Comments/in EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

Wishing everyone a healthy and prosperous new year. I would like to finalize the blog posts in 2016 with some of the good chart set-ups in the Emerging Markets that are likely to resolve into trends in 2017. A detailed update on Developed Markets will follow in the first week of the new year.

ISHARES MSCI EMERGING MARKETS ETF (EEM)

ISHARES EMERGING MARKETS ETF listed in the NYSE is trying to rebound from 34 levels with a positive divergence on the MACD. The big question is will this prove to be a double bottom and put a medium-term low for the emerging markets. If yes, the implication is positive at least for the first half of 2017. For now we can say that EEM is forming a range between 34 and 36.5.

ISHARES EM – DAILY SCALE

DUBAI FINANCIAL MARKET GENERAL INDEX (.DFMGI)

DUBAI FINANCIAL MARKET GENERAL INDEX is forming a 9 month-long rectangle. The boundaries stand at 3,200 and 3,620. 3,620 was tested for 3 times over the past 9 months. Rectangle is usually considered to be a continuation chart pattern. This implies a possible breakout on the upside. Breakout above 3,620 levels can result in an upward momentum for the UAE equities in 2017.

DFMGI – WEEKLY SCALE

METHAQ (METH.AD)

METHAQ is an insurance company listed in the UAE exchanges. A similar chart pattern is developing on the stock price. A well-defined 9 month-long rectangle has boundaries between 0.965 and 0.75. Breakout above 0.965 will suggest higher prices with a chart pattern initial price target of 1.20. Inefficiencies in some of the emerging markets usually result in uninterrupted trend periods. Breakouts from these type of well-defined trading ranges can be very rewarding.

METHAQ – WEEKLY

BANK VTB PAO (VTBR.MM)

Bank VTB PAO is a Russia-based company, which is engaged in commercial banking sector. Price chart of the stock is forming a 19 month-long symmetrical triangle. While the stock trades in decimal units, the width of the symmetrical triangle has now reduced to 12% range. Breakout from the lengthy consolidation can result in a strong trend period. Emerging market funds and traders/investors who are active in Russia should benefit from a possible upward breakout.

BANK VTB – WEEKLY SCALE

ADIRA FINANCE (ADMF.JK)

Adira Finance is a conventional consumer financing company listed in Indonesia. Stock price is recovering from its losses in 2015 and the uptrend that started in 2016 can still have legs. Over the past 4 months price formed a rectangle continuation. Strong breakout from the 4 month-long sideways consolidation can result in a positive first quarter for the stock. Rectangle price target is at 7,600 levels.

ADIRA FINANCE – WEEKLY SCALE

PEKAO BANK (PKO.WA)

BANK POLSKI SA is a Poland-based commercial bank. It is listed in Warsaw Stock Exchange with USD 8.3 billion market cap. Stock price is forming a year-long base formation. The chart pattern can be identified as a complex H&S bottom. A daily close above 28.60 will confirm the breakout from the year-long bottom reversal.

PEKAO BANK – WEEKLY SCALE

AKBANK (AKBNK.IS)

AKBANK is a commercial bank listed in Istanbul Stock Exchange. Several financial companies including the benchmark equity index in Turkey has similar chart pattern development. AKBANK is forming a 3 year-long symmetrical triangle which is now very close to a possible breakout. 8.5 level is the upper boundary of the long-term consolidation range. A positive development is taking place worth mentioning on the daily scale charts. 2 month-long H&S bottom is possibly forming with the neckline standing at 8.0 levels. Both the daily and the weekly scale charts have positive implications for the new year.

AKBANK – WEEKLY SCALE

AKBANK – DAILY SCALE

SK TELECOM (017670.KS)

SK TELECOM CO. LTD. provides wireless telecommunications in Korea. developing chart pattern on this stock has two interpretations. The bullish interpretation is that the stock is forming a year-long ascending triangle with the horizontal boundary standing at 233K. Ascending triangles are usually bullish chart patterns that resolve with a breakout above the horizontal boundary. Such price action will result in a massive H&S top failure and should be considered positive for SK TELECOM in 2017. The bearish interpretation is that the stock is forming a multi-year H&S top with the neckline standing at 195K. In this case the year-long ascending triangle will break on the downside resulting in a sharp sell-off towards the 195K levels. A decisive breakout from the year-long ascending triangle will take place in the following weeks.

SK TELECOM – WEEKLY SCALE

CENTRAL EUROPE, RUSSIA & TURKEY

December 10, 2016/0 Comments/in EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

CENTRAL EUROPE, RUSSIA & TURKEY (CEE)

CEE is a closed-end fund listed in the NYSE. The fund seeks long-term capital appreciation through investment primarily in equity or equity linked securities of issuers domiciled in Central Europe, Russia and Turkey. A new chart pattern breakout signal is triggered with a strong weekly close on CEE. Price chart of CEE completed a year-long H&S bottom by clearing the strong horizontal resistance at 19.55 levels. From a charting perspective there are several positive interpretations of the latest price action. While the larger scale chart pattern can be identified as a H&S bottom, the right shoulder of the base formation took the form of a bullish ascending triangle. Both chart patterns were completed this week with a decisive breakout above the horizontal boundaries. Ascending triangle price target stands at 21.75 levels. Year-long H&S bottom price target stands at 24.35 levels. A long trade is entered at the close of the week with stop-loss at 19.1. The CEE fund is managed by Deutsche Bank and latest publicly available holdings and the composition of the fund is shown on their website. For more information you can visit Deutsche Asset Management page.

CEE – WEEKLY SCALE

CEE – DAILY SCALE

HONG KONG – SUNAC CHINA HOLDING

December 8, 2016/0 Comments/in EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

SUNAC CHINA HOLDING (1918.HK)

A new chart pattern breakout signal is triggered on Hong Kong listed SUNAC CHINA HOLDING. After its 6th test, SUNAC broke out of a year-long rectangle with a strong daily bar and increasing volume. If the stock manages to hold on to gains by the end of the week, it will also register a strong weekly close. Breakouts from horizontal trading ranges are usually reliable. Today’s strong close pushed the price well above the horizontal resistance at 6.05 levels and the breakout confirmation level at 6.23. A long trade is entered with stop-loss at 5.90. Rectangle chart pattern price target stands at 7.7 levels. Failure to hold above 6.05 levels in the following days/weeks will put the bullish interpretation in question.

SUNAC CHINA HOLDING – WEEKLY SCALE

SUNAC CHINA HOLDING – DAILY SCALE

GERMANY DAX INDEX

December 7, 2016/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

GERMANY DAX INDEX – DAILY SCALE

Germany’s DAX Index breaks out of a 4 month-long rectangle chart pattern with a possible break-away gap. Tech Charts blog drew attention to the developing chart pattern in the last week of November (Germany Dax Index – 20/11/2016). Today’s price action cleared the strong 4 month-long horizontal resistance at 94.60 levels. For common stocks, Edwards and Magee in their book Technical Analysis of Stock Trends suggest that for a breakout confirmation a daily close by a 2.5%-3% margin above resistance level is required. While, this margin can be perfectly fine for stocks, for indices, commodities and currencies it could result in a delayed entry. More appropriate threshold could be a daily close by a margin of 0.5%-1% above the resistance area for indexes, commodities and currencies.

Breakout on Germany’s DAX index cleared that threshold (grey dashed line at 10,910) with a strong daily close and confirmed the breakout from the 4 month-long rectangle chart pattern. Rectangle is a continuation chart pattern. Breakout not only took place with a strong daily close but also with a possible break-away gap. Richard Schabacker in his pioneering research (Technical Analysis and Stock Market Profits) on classical charting, explains break-away gaps as follows:

Break-away gap appears at the beginning of a movement and generally comes at the completion of some definite area formation. It is seldom covered for some time in the future and, when it proceeds from a strong major bottom formation, it may never be covered, or at least not until the return of prices in the next great cycle some years later. The Break-away gap is comparatively uncommon and indicates a definite change in the technical picture…The logical conclusion is, therefore, for a continuation of that strong movement in the direction toward which the gap was made.

As a matter of fact, it is always difficult and frequently impossible to be certain whether a gap is of the Common or Break-away variety at the instant that the gap appears. This is the principal reason why we cannot place too much credence in the various gap theories and why we must consider gaps as of only secondary importance in forecasting. The fact remains that most gaps which lead decisively out of an established pattern are not closed; they become and remain true Break-away gaps. And the wider the Break-away gap at the breakout, the less likely it is to be closed.

In brief, the Break-away gap emphasizes the breakout of prices and indicates a sudden change in the technical picture, but the mere fact that prices have broken decisively out of a technical formation is of greater importance than the gap. When the evidence of the gap is added to all the other evidences of a decisive breakout, we are encouraged to act promptly and decisively.

For stock traders, I attached below the ISHARES DAX UCITS ETF that is listed in Germany. Price chart of the ETF is very similar to the index as it tracks the performance of the XETRA DAX index. The upper boundary of the rectangle was standing at 94.60. With the decisive breakout I initiated a long position with a stop-loss slightly below the boundary at 93.30 levels. Rectangle chart pattern price target is at 100 levels for the ISHARES DAX ETF. Tech Charts twitter followers can find chart pattern breakout signals under #TECHCHARTSALERT

ISHARES DAX UCITS ETF – DAILY SCALE

PORSCHE AUTO HOLDING (PSHG_p.DE)

Strength in European equities can gain momentum. A chart that is currently on my watch list is PORSCHE AUTO HLDG listed in Germany. Stock is possibly forming a year-long symmetrical triangle that could act as a bottom reversal if the price can clear strong resistance area between 49.65 and 50. A decisive close above 50.85 levels will confirm the breakout from the long-term sideways consolidation. Tech Charts twitter followers can find developing chart patterns under #TECHCHARTSWATCHLIST

PORSCHE AUT HLDG – WEEKLY SCALE