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SOUTH AFRICA ALL SHARE INDEX

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South Africa equities are possibly entering into a strong uptrend with the completion of a 2 year-long sideways consolidation. Last week's price action breached the multi-year trend resistance on the South Africa All Share index and pushed the local equity benchmark to all-time highs. Breakouts from multi-year consolidations usually result in multi-month trends. 54,600 levels will remain as strong support. Possible chart pattern price target for the South Africa All Share Index stands at 63,700 levels.

There are several tradable ETFs listed on the local exchange and also on the global exchanges. Below is a chart of South Africa listed ETF.

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GLOBAL EQUITY MARKETS – May 27, 2017

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Dear Tech Charts members,

Thank you for joining Tech Charts as Founding Member. I hope to identify many great chart set-ups, trading & investment themes and add value to your decision making process in the years ahead. This week's Global Equity Markets report covers several ETFs from different regions, single stocks from Developed and Emerging countries and equity indices. You will find that some of the themes are longer-term and can offer great opportunity once these chart patterns are resolved on the upside. In this report I also added a section that explains what each label on the charts and section headers stand for. I hope this will make it easier to navigate through the charts.

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GLOBAL EQUITY MARKETS – May 13, 2017

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Reminder:  Just one week left until our Founding Member launch on May 22nd!

 

It has been a strong week for equities in emerging Asia and also a strong start for the month of May. South Korea KOSPI index is breaking out to all-time highs by clearing its 6 year-long horizontal resistance at 2,210 levels. The index possibly formed a multi-year long bullish ascending triangle. A strong monthly close will signal positive performance for the coming months. The ascending triangle chart pattern price target stands at 2,750 levels. Emerging Asia is a big component in the MSCI Emerging Markets index. As of May 11, 2017 the top 3 counties in the index are China (26.92%), S.Korea (15.34%) and Taiwan (12.20%).

While the local currency stock market index South Korea KOSPI is breaking out to all-time highs, the U.S. Dollar denominated MSCI S.KOREA price index is few percentage points away from reaching new all-time high levels. The price action is clearly positive. The 9 year-long downward sloping trend line is standing at 460 levels. MSCI S.KOREA index is trying to break out of its multi-year sideways consolidation range.

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GLOBAL EQUITY MARKETS – May 13, 2017

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It has been a strong week for equities in emerging Asia and also a strong start for the month of May. South Korea KOSPI index is breaking out to all-time highs by clearing its 6 year-long horizontal resistance at 2,210 levels. The index possibly formed a multi-year long bullish ascending triangle. A strong monthly close will signal positive performance for the coming months. The ascending triangle chart pattern price target stands at 2,750 levels. Emerging Asia is a big component in the MSCI Emerging Markets index. As of May 11, 2017 the top 3 counties in the index are China (26.92%), S.Korea (15.34%) and Taiwan (12.20%).

While the local currency stock market index South Korea KOSPI is breaking out to all-time highs, the U.S. Dollar denominated MSCI S.KOREA price index is few percentage points away from reaching new all-time high levels. The price action is clearly positive. The 9 year-long downward sloping trend line is standing at 460 levels. MSCI S.KOREA index is trying to break out of its multi-year sideways consolidation range.

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GLOBAL EQUITY MARKETS-04/02/2017

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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

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 – WEEKLY SCALE

EURO STOXX 600 - MONTHLY 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

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

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

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

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

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

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

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

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

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

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

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

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

VAKIF BANK – WEEKLY SCALE

UAE, RUSSIA, TURKEY, POLAND

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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

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

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

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

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 – WEEKLY SCALE

AKBANK - DAILY 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

SK TELECOM – WEEKLY SCALE

 

CENTRAL EUROPE, RUSSIA & TURKEY

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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 – WEEKLY SCALE

CEE - DAILY SCALE

CEE – DAILY SCALE

TURKEY BIST 100

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Turkish equities are at critical support levels from where they can see a possible turnaround. We are talking about a country and financial markets that experienced a failed coup, an S&P downgrade and a recently declared state of emergency. Yet the magnitude of the correction is less than what BIST 100 experienced after the Gezi Park protests in 2013 and much smaller in magnitude when compared with the banking crises in 2000-2003 and the global financial melt-down in 2007-2008. Is it possible to say the worst is over?

TURKEY BIST 100 W

Long-term chart of the BIST 100 index shows the multi-year long uptrend being tested between 70K-72K area. This is also the lower boundary of a larger scale sideways correction which I label it as a symmetrical triangle.

TURKEY BIST 100 D

Daily chart shows the 3 year-long sideways consolidation. After the recent sell-off the BIST 100 index is now very close to strong support area between 70K and 72K. Unless we see a breakdown below the strong support area, we will expect a rebound and a possible reversal.

MSCI TURKEY VS MSCI EM

MSCI Turkey has underperformed MSCI Emerging Markets index. Though, the ratio between MSCI TURKEY and MSCI EM is now at a major support level. This ratio is indexed to 1 with the base year being 2016. Since the beginning of the year, including the latest sell-off the ratio stands at 0.92. This is 8% underperformance versus the MSCI EM. More important than the numbers, I think the level of the ratio suggests a possible reversal. Unless there is a breakdown below 0.90-0.94 area, being long Turkey versus MSCI EM at this inflection point could be a low risk trade.

BIST 100 INDEX

IND VS BIST

Corrections led by a financial/economic cause has been deeper and more lengthy when compared with corrections led by political turmoil. Recent data from 1996 till today supports this conclusion. 2000-2003 was the banking crisis in Turkey. 2007-2008 was the global financial melt-down. Both has been the major corrective periods on BIST 100 index. 2011-2012 was related to the global recession fears and the global equity corrections. Since 2013, BIST 100 is in a sideways consolidation.

During each corrective period, Industrials outperformed the BIST 100 index. In other words Financials have under-performed. Risk on trade for Turkish equities have always been buying the financials. Industrials have been a defensive play. The ratio between Industrial Index and BIST 100 reached 2003 levels. If there is a turnaround (a market reversal), you should keep an eye on the performance of financials in the coming weeks. This ratio should also reverse from 2003 levels.

Several charts above suggests equity markets in Turkey are at a major turning point. If we see stability at these levels I’ll weigh going long Turkey.